EXHIBIT 99.2
CONTRIBUTION AGREEMENT
THIS AGREEMENT (this "Agreement") made this 4th day of August, 2003
between PRIME GROUP REALTY, L.P., a Delaware limited partnership (herein called
"PGRLP"), with an address at ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, telecopier number ▇▇▇-▇▇▇-▇▇▇▇; and ▇▇▇▇
CHICAGO, L.C., a Florida limited liability company (hereinafter called "▇▇▇▇"),
with an address at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, telecopier
number ▇▇▇-▇▇▇-▇▇▇▇;
WITNESSETH:
For and in consideration of the mutual entry into this Agreement by the
parties hereto and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, PGRLP and ▇▇▇▇ do agree as follows:
ARTICLE 1
DEFINITIONS
The following terms as used in this Agreement shall have the meanings
ascribed to them below:
1.1 "Administrative Fee". A fee payable to ▇▇▇▇ equal to $50,000.00 per
month which will be an expense of Dearborn Center (defined below) and
have priority over distributions to the members of Dearborn Center as
set forth in the Operating Agreement (defined below), but shall not
have priority over payments due under the Management Agreement.
1.2 "Approved Loan". A new first mortgage loan to be funded at Closing
(defined below) which, unless PGRLP and ▇▇▇▇ shall agree otherwise in
their sole discretion, shall conform to the requirements of the term
sheet ("HELABA Loan Term Sheet") provided by Landesbank
Hessen-Thuringen Girozentrale, a copy of which is attached hereto as
Exhibit XXII, with the following modifications and/or additions: (a)
the Approved Loan shall bear interest at a fixed rate of interest
acceptable to both PGRLP and ▇▇▇▇ in their sole discretion, and provide
for payments of interest only monthly in arrears without any
amortization of principal for the first two (2) years; (b) Dearborn
Center shall agree to a $22,500,000.00 tenant improvement reserve to be
held back by the Lender, provided it can be drawn upon as Leases are
executed and correspondingly tenant improvement and leasing commission
expenses are incurred and the last clause of the "Other Requirements"
Section on page 3 of Exhibit XXII shall be deleted; (c) the Approved
Loan is to be non-recourse to Dearborn Center LLC with only customary
carveouts, and completely non-recourse to its members, and if the
Lender (defined below) making the Approved Loan requires guarantees
and/or indemnifications with respect to the carveouts, all of same will
be provided by Dearborn Center; and (d) the 1.10 DSCR test and the 1.30
DSCR test will only be applicable starting after the end of the second
loan year. All costs and expenses related to funding of the Approved
Loan shall be paid by Dearborn Center, including a fee to a mortgage
broker of up to 1/2 of 1% of the amount of the Approved Loan, if ▇▇▇▇
and PGRLP mutually agree to use a mortgage broker.
1.3 "Bank One Lease". That certain lease dated as of January 24, 2000, as
amended from time to time, between Bank One, NA ("Bank One") as tenant
and Dearborn Center, as Landlord for certain premises demised in the
Project (defined below).
1.4 "Bank One Rights". The right to share in sale and refinancing proceeds
in favor of Bank One under the terms of Section 41 of the Bank One
Lease.
1.5 "Citadel Cash Escrow". A cash escrow of $14,645,000.00 to be deposited
at Closing by PGRLP to secure Landlord's Reimbursement Obligations as
defined under the Citadel Lease, which escrow shall be held by the
Escrow Agent.
1.6 "Citadel Lease". That certain lease dated as of February 9, 2001, as
amended from time to time, between Citadel Investment Group, L.L.C.
("Citadel") as tenant, and Dearborn Center, as landlord for certain
premises demised in the Project.
1.7 "Dearborn Center". Dearborn Center, L.L.C., which is the owner of the
Property.
1.8 "Effective Date". The date when this Agreement has been executed and
delivered by ▇▇▇▇ and PGRLP.
1.9 "Escrow Agent". Near North National Title Insurance Company.
1.10 "Existing Leases". Those Leases with tenants at the Project (defined
below), all of which are presently in force and which are listed on the
rent roll attached as Exhibit "I" attached hereto.
1.11 "Existing Tenant Improvements Escrow". A cash escrow to be deposited at
Closing by PGRLP under the PGRLP Indemnification Agreement to fund all
completion costs for the shell and core of the Project and all costs
related to tenant improvements and allowances with respect to Existing
Leases.
1.12 "Holdback". The amount of $14,000,000.00 that will be withheld from
Dearborn Center at the time of Closing ($9,800,000.00 is represented by
the ▇▇▇▇ Earnout and $4,200,000.00 of which is represented by the
"PGRLP Earnout" (defined below). When the Leasing Condition (defined
below) has been met, the Holdback will be contributed to Dearborn
Center. The method of contribution shall be that ▇▇▇▇ shall contribute
an additional $9,800,000.00 cash to Dearborn Center and receive an
increase in its Invested Equity (defined below) in that amount, and
PGRLP shall receive a credit for a $4,200,000.00 contribution which
will increase PGRLP's Invested Equity by that amount.
1.13 "Invested Equity". The amount of capital actually contributed to
Dearborn Center by ▇▇▇▇ or actually credited to PGRLP as having been
contributed to Dearborn Center in accordance with the provisions
hereof, without deduction for any profits or distributions made to
PGRLP or ▇▇▇▇ except as provided in the Operating Agreement (defined
below).
1.14 "Investigation Period". A period of time commencing on the Effective
Date and ending twenty-seven (27) days thereafter.
1.15 "Key Property Materials". That part of the Property Materials (defined
below) consisting of: existing as-built surveys of the Real Property
(defined below); existing most recent environmental, physical condition
and soil studies or reports of the Project; current detailed rent roll
of the Project if different than Exhibit "I"; copies of operating
statements for all periods commencing on the date of the first receipt
of rent from a tenant occupying space in the Project and year to date
2003 (through June 30, 2003) reflecting all income and expenses of the
Project; copies of all federal, state and local tax returns of Dearborn
Center for such periods; copies of certificates of occupancy or other
evidence that the space in the Project may be lawfully occupied; copies
of all current tax bills and special assessment notices for the
Project; and copies of all Leases in effect on the Effective Date for
space in the Project, and subleases and related agreements entered into
with respect to the One North ▇▇▇▇▇▇ premises leased by Citadel.
1.16 "Leases". Leases for space in the Project including the Existing Leases
and any and all other leases which may be executed prior to Closing
hereunder by Dearborn Center with tenants for the vacant spaces in the
Project.
1.17 "Leasing Condition". The leasing of 40,000 square feet of space at the
Project over and above the square footage leased as of the Effective
Date pursuant to Existing Leases to tenants who have accepted their
premises, taken possession of their premises and begun paying full
rents under their Leases.
1.18 "Lender". The lender which agrees to and does make the Approved Loan.
1.19 "LLC Interests". The limited liability company membership interests in
and to Dearborn Center.
1.20 "Management Agreement". A Management and Leasing Agreement to be
entered into between an affiliate of PGRLP and Dearborn Center at the
time of Closing providing for PGRLP's designated affiliate to manage
and lease the Project for and on behalf of Dearborn Center. The
Management Agreement will be in form of Exhibit "II" attached hereto.
1.21 "Operating Agreement". The Amended and Restated Operating Agreement of
Dearborn Center as it will exist from and after Closing in form of
Exhibit "III" attached hereto.
1.22 "Personal Property". All plans, drawings, permits, governmental
authorizations, contracts, documents, surveys, site plans, engineering
reports, soil and environmental studies, leases, construction and
manufacturer warranties, supplies, the Redevelopment Agreement (defined
below), and all other tangible personal property located on or owned by
Dearborn Center and utilized in connection with operation of the Real
Property and all intangible property arising from ownership and/or
operation of the Real Property but inclusive of the right of use of the
name of the Project. The Personal Property shall not include bonds,
bank accounts, accounts receivable existing as of Closing or pertaining
to any period of time prior to Closing, letters of credit, deposits and
other sureties placed by PGRLP and/or Dearborn Center or their
affiliates with governmental authorities or utility companies in
connection with the construction of the Project (but excluding such
items as utility deposits required to remain in place for the operation
of the Project) ("Construction Security"), all of which shall remain
the property of PGRLP.
1.23 "PGRLP Earnout". $4,200,000.00 which will be deemed to have been held
back by PGRLP from its Invested Equity as part of the Holdback.
1.24 "Project". That 37-story office-retail building, underground garage and
other improvements containing a total of approximately [1,536,751]
rentable square feet (approximately [1,441,402] square feet of which is
office space, approximately [95,349] square feet of which is retail
space and there is approximately 24,218 square feet of lower level
storage space) and approximately 190 parking spaces located on and
encompassing the Real Property.
1.25 "Property". All of the Real Property and the Personal Property.
1.26 "Property Materials". All instruments, documents, leases, contracts,
surveys, plats, plans, specifications, reports, studies, permits,
applications, authorizations, approvals, proposals, applicable
copyright and trademark materials, and other materials owned by
Dearborn Center or within Dearborn Center's control or possession which
consist of the Personal Property or which in any way pertain to the
Real Property or Personal Property. The following enumerated items are
included in the definition of "Property Materials" but are not intended
to constitute a complete or comprehensive list thereof: as-built
surveys; existing title insurance policy and title insurance commitment
to be issued pursuant to Section 6.1 and legible copies of exceptions
to title; site plan; Leases; copies of any lease proposals not yet
finalized; soil tests; environmental studies; rent roll; service and
utility letters, proposals and contracts; construction bids and
contracts; copies of documents regarding joint use and/or maintenance
of roads, parking areas and ingress and egress easements; zoning
authorizations; existing certificates of occupancy and other
governmental approvals and permits; copies of real property tax bills
and special assessment notices for the Project; copies of operating
statements for the Project; Dearborn Center local, state and federal
tax returns of every kind for all years of existence and, when filed,
2003; general ledger and statements of income and expense (and cashflow
if they exist), accounts receivable and payable lists and balance sheet
for Dearborn Center; Redevelopment Agreement (together with copies of
the Developer Note described therein, and, if and when issued, of the
DPD Certificate described in Section 7.01 thereof).; and copies of the
organizational documents of Dearborn Center.
1.27 "Real Property". That parcel or parcels on which the Project is
situated which is located at ▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
and which is legally described on Exhibit "V" attached hereto. Included
within the term Real Property is all of Dearborn Center's right, title
and interest in and to:
A. Any land lying in the bed of any highway, street, road or avenue,
open or proposed, in front of or abutting or adjoining the Real
Property.
B. All riparian rights, if any.
C. All appurtenances, hereditaments, tenements and air rights
appertaining to the Real Property.
D. All improvements located on or affixed to the Real Property.
1.28 "Redevelopment Agreement". That certain Dearborn Center Redevelopment
Agreement between the City of Chicago and Dearborn Center dated as of
August 1, 2002, as amended from time to time, a copy of which is
attached as Exhibit "VI" attached hereto.
1.29 "Title Company". Near North National Title Insurance Company, located
at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇
▇▇▇▇▇▇▇▇.
1.30 "▇▇▇▇'▇ Counsel". ▇▇▇▇ ▇▇▇▇▇▇▇, Esq. of the law firm of ▇▇▇▇▇ ▇▇▇▇▇
Ciklin ▇▇▇▇▇▇ Martens ▇▇▇▇▇▇ & ▇'▇▇▇▇▇▇▇, Northbridge Tower, 18th
Floor, ▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇.
1.31 "▇▇▇▇ Earnout". ▇▇▇▇'▇ $9,800,000.00 portion of the Holdback (defined
below).
ARTICLE 2
CONTRIBUTION OF ▇▇▇▇'▇ INVESTED EQUITY
2.1 Subject to the terms and provisions herein contained, ▇▇▇▇ agrees to
contribute Invested Equity in the amount of $114,800,000.00 ("▇▇▇▇
Invested Equity") to Dearborn Center LLC and will become the owner of
70% of the LLC Interests.
ARTICLE 3
CONTRIBUTION
3.1 ▇▇▇▇ Invested Equity. The ▇▇▇▇ Invested Equity is based on a valuation
of the Property agreed upon by ▇▇▇▇ and PGRLP at Four Hundred
Thirty-Four Million Dollars ($434,000,000.00) less the amount of the
$22,500,000.00 holdback under the Approved Loan and an assumption that
the Approved Loan will be Two Hundred Seventy Million Dollars
($270,000,000.00). If the Approved Loan is greater than $270,000,000.00
(but less than $290,000,000.00), the ▇▇▇▇ Invested Equity will decrease
by seventy percent (70%) of the differential between the actual amount
of the Approved Loan and $270,000,000.00.
3.2 Deposits. The first component of the ▇▇▇▇ Invested Equity is payment of
a One Million Dollar ($1,000,000.00) ▇▇▇▇▇▇▇ money deposit to the
Escrow Agent within two business days after the Effective Date,
pursuant to an ▇▇▇▇▇▇▇ money escrow agreement ("▇▇▇▇▇▇▇ Money Escrow
Agreement") between Escrow Agent, ▇▇▇▇ and PGRLP in the form attached
hereto as Exhibit "XXI". An additional ▇▇▇▇▇▇▇ money deposit will be
due and payable by ▇▇▇▇ to the Escrow Agent in the amount of Two
Million Dollars ($2,000,000.00) within one business day following the
end of the Investigation Period, unless ▇▇▇▇ has terminated this
Agreement as provided in Article 4 below. At the time of contribution
of the ▇▇▇▇ Invested Equity, the ▇▇▇▇▇▇▇ money deposits shall be
contributed to Dearborn Center and credited to the ▇▇▇▇ Invested
Equity. The ▇▇▇▇▇▇▇ money deposits of $1,000,000.00 initially and
$3,000,000.00 in the aggregate will be placed in an interest-bearing
investment approved by ▇▇▇▇ and PGRLP, which approval will not be
unreasonably withheld, with interest to be accrued in such investment
for the benefit of ▇▇▇▇ unless ▇▇▇▇ shall default hereunder and PGRLP
shall become entitled to the ▇▇▇▇▇▇▇ money deposit(s), in which case
all such interest shall be paid to PGRLP. All references in this
Agreement to return of the ▇▇▇▇▇▇▇ money deposit(s) hereunder to ▇▇▇▇
shall be deemed to include interest earned thereon. Interest on the
▇▇▇▇▇▇▇ money deposits will be allocated for tax purposes to ▇▇▇▇.
3.3 Balance. The balance of the ▇▇▇▇ Invested Equity shall, subject to the
provisions of Section 3.4 below, be payable to the Escrow Agent at
Closing by wired funds or certified check drawn on a United States
bank; subject, however, to prorations and adjustments as provided in
Section 13.1.
3.4 Holdback. Notwithstanding the foregoing provisions of this Article 3,
at Closing ▇▇▇▇ will withhold the ▇▇▇▇ Earnout which will be
contributed to Dearborn Center only at such time as the Leasing
Condition is met. In the event that the Leasing Condition is satisfied
and ▇▇▇▇ fails to contribute the ▇▇▇▇ Earnout as provided in this
Agreement, then PGRLP shall have such rights and remedies with respect
thereto as are provided in the Operating Agreement, and in that certain
guaranty made by Estein & Associates, Ltd. in favor of PGRLP ("Earnout
Guarantee") in the form attached hereto as Exhibit XXIII.
ARTICLE 4
INVESTIGATION
4.1 ▇▇▇▇ Investigation Rights. During the Investigation Period and upon
prior reasonable notice to PGRLP and subject to the provisions of
Section 4.4 below, ▇▇▇▇ and ▇▇▇▇'▇ agents, professionals and
independent contractors shall have the right of access to the Property
and to PGRLP's records at any reasonable time during the Investigation
Period to conduct tests; take measurements; complete surveys; review
bids; review Leases, contracts, correspondence, tax returns and other
records; conduct conversations with PGRLP and PGRLP's agents, employees
and independent contractors, and with tenants and prospective tenants,
governmental officials, utility company representatives and all other
parties having anything to do with the Property; and examine and
investigate the Property and Property Materials in any reasonable way
for all other purposes consistent with evaluation of and potential
joint ownership, development and operation of the Property and
ownership of the LLC Interests. PGRLP agrees to reasonably cooperate
with ▇▇▇▇ in ▇▇▇▇'▇ investigation. Notwithstanding anything to the
contrary set forth in this Article 4, ▇▇▇▇ shall not be permitted to:
(a) undertake any physically intrusive testing, including without
limitation any Phase II Environmental testing, or (b) contact any
tenants, prospective tenants, contractors, vendors, existing or prior
lenders or representatives of the City of Chicago or other governmental
authorities with respect to the Property without such contact being
initiated by PGRLP and a representative of PGRLP being present if PGRLP
so elects. It is understood that PGRLP shall be under no obligation to
permit ▇▇▇▇ to contact any tenants until such time as a commitment for
the Approved Loan has been issued by Lender, containing terms
acceptable to PGRLP.
4.2 Costs; Delivery. The cost and expense of delivering or making available
the Property Materials shall be borne by PGRLP. The cost and expense of
all other aspects of ▇▇▇▇'▇ investigations shall be borne by ▇▇▇▇.
PGRLP shall, on or as soon as possible after the Effective Date deliver
or make available to ▇▇▇▇ or to ▇▇▇▇'▇ Counsel the Key Property
Materials and shall, at the same time or as soon as possible
thereafter, deliver or make available to ▇▇▇▇ or to ▇▇▇▇'▇ Counsel the
remainder of the Property Materials. Upon request of ▇▇▇▇, PGRLP shall
attempt to have all third party reports and studies which are part of
the Property Materials certified to ▇▇▇▇ or to obtain reliance letters
with respect to same addressed to ▇▇▇▇ or its designee. If there is an
extra charge to PGRLP for obtaining such certification or letter and
such charge is reasonable and customary, ▇▇▇▇ will bear the cost
thereof, otherwise PGRLP shall not be required to obtain such
certification or letter. PGRLP will not be obligated to obtain any new
tests or studies for ▇▇▇▇.
4.3 Right of Termination. If ▇▇▇▇, in ▇▇▇▇'▇ sole discretion, shall
determine for any reason that ▇▇▇▇ is not entirely satisfied with the
results of ▇▇▇▇'▇ inspections or that ▇▇▇▇ no longer desires to
contribute the ▇▇▇▇ Invested Equity, ▇▇▇▇ shall have the right to
terminate this Agreement by giving notice to PGRLP and Escrow Agent
hereunder within one (1) business day after expiration of the
Investigation Period, in which case, ▇▇▇▇ will be entitled to the
return of its ▇▇▇▇▇▇▇ money deposit. If ▇▇▇▇ does not terminate this
Agreement as provided in the preceding sentence, ▇▇▇▇ shall pay the
additional $2,000,000.00 ▇▇▇▇▇▇▇ money deposit in accordance with
Section 3.2. Upon the expiration of the first business day following
expiration of the Investigation Period without ▇▇▇▇ having terminated
this Agreement, all of the ▇▇▇▇▇▇▇ money deposits shall, subject to the
provisions of this Agreement, be at risk, and be non-refundable to
▇▇▇▇, except if this Agreement is terminated by ▇▇▇▇ pursuant to
Sections 6.1, 7.1, 9.4, 11.1, 11.3, 14.1, 14.3 or 17.1 of this
Agreement.
4.4 Insurance, Repair and Indemnity. Prior to entry onto any of the Real
Property to perform studies, tests, investigations or surveys,
(collectively, the "Inspections") ▇▇▇▇ (or each contractor performing
such services for ▇▇▇▇) will provide a certificate of insurance to
PGRLP naming PGRLP, Dearborn Center, their relevant affiliates and the
existing lenders for the Property (collectively, the "Additional
Insureds") as additional insureds in amounts and form reasonably
acceptable to PGRLP. ▇▇▇▇ agrees to repair, at ▇▇▇▇'▇ cost and expense,
any damage to the Project caused by, or in connection with any of the
inspections performed by or for ▇▇▇▇. ▇▇▇▇ also agrees all of its
inspections will be performed in a manner that will not unreasonably
interfere with operation of the Project or tenants operating within the
Project. ▇▇▇▇ will indemnify, defend and hold the Additional Insureds
harmless from and against any cost, expense, damage or liability
incurred by them as a result of damage to property or injury to persons
incurred as a result of ▇▇▇▇ or its agents or independent contractors
entering the Real Property, and/or performing work or conducting
inspections thereon, which indemnification, agreement to defend and
hold harmless will survive Closing hereunder or termination of this
Agreement.
4.5 Delivery of Approved Loan Documents. Promptly upon receipt by PGRLP or
▇▇▇▇ of any term sheet, loan commitment or loan documents in connection
with the Approved Loan, not also simultaneously delivered to the other
party, the receiving party shall provide copies thereof to the other
party to enable both parties to confirm that the Approved Loan and
Approved Loan documents satisfy the requirements of this Agreement.
ARTICLE 5
TITLE
5.1 Permitted Exceptions. At Closing, the Real Property is to be subject
only to the following (all of which shall be deemed "Permitted
Exceptions"):
A. Real estate taxes and special assessments not yet due and payable
for the year in which the Closing shall occur.
B. Zoning and/or restrictions and prohibitions imposed by
governmental authorities, none of which shall prevent use of the
Real Property for its present uses set forth in Section 1.26 as
presently configured.
C. Restrictions, reservations and easements recorded in the public
records of the county where the Project is located, none of which
shall interfere with the use of the Real Property for its
intended purposes, contain any rights of reverter, or render the
title unmarketable in the opinion of ▇▇▇▇'▇ Counsel as determined
during the Investigation Period, and all of which shall be
subject to the reasonable approval of ▇▇▇▇'▇ Counsel as provided
in Section 6.1 below.
D. Rights of tenants under the Leases, none of whom will have any
option to purchase or rights of first refusal to purchase any
portion of the Property, except for the Bank One Rights.
E. The mortgage and other documents securing the Approved Loan.
F. Those matters set forth on Exhibit VII attached hereto.
G. Other matters agreed to pursuant to Section 6.1 below.
ARTICLE 6
TITLE INSURANCE
6.1 Commitment. PGRLP shall, within ten (10) days after the Effective Date,
deliver to ▇▇▇▇ a title insurance commitment, together with legible
copies of all exceptions shown thereon (other than existing loan
documents) committing to insure title to Dearborn Center in the amount
of $434,000,000.00. Alternately, PGRLP may deliver a copy of Dearborn
Center's existing title insurance policy and a commitment to endorse it
as of Closing hereunder in the amount of $434,000,000.00, together with
legible copies of all exceptions shown thereon (other than existing
loan documents). In either case, the commitment shall contain or be
accompanied by a closing protection letter from the underwriter in a
form reasonably acceptable to ▇▇▇▇. If the title insurance commitment
shall disclose any defects in title, ▇▇▇▇ shall so notify PGRLP in
writing prior to the date ("Title Objection Date") which is the earlier
of (i) the expiration of the Investigation Period and (ii) fourteen
(14) days after receipt thereof. If ▇▇▇▇ fails to notify PGRLP on or
prior to the Title Objection Date of any notice of objection to any
title matter, ▇▇▇▇ shall be deemed to have accepted title to the Real
Property as evidenced by the title commitment. The commitment will
acknowledge that the final title policy will contain a Fairways
Endorsement, non-imputation endorsement and endorsements per Section
6.2 below, and, if customarily provided by the Title Company at no
additional cost, will state that the policy will be issued in
connection with a contribution of capital to Dearborn Center. Within
ten (10) days after receipt of ▇▇▇▇'▇ notice of objection to any title
matter, PGRLP will notify ▇▇▇▇ if PGRLP will undertake to attempt to
cure the objectionable title matter(s) (which such cure (subject to the
reasonable approval of ▇▇▇▇) may consist of the Title Company insuring
over any such title matter). If PGRLP elects not to cure the
objectionable matter, ▇▇▇▇ shall, by notice to PGRLP given within ten
(10) days after receipt of PGRLP's notice, either terminate this
Agreement or waive all such title objections which PGRLP has not agreed
to cure. If PGRLP elects to cure the objectionable matter but is unable
to do so after thirty (30) days, and does not commit to do so by
Closing, ▇▇▇▇ can elect to give PGRLP an additional thirty (30) days to
cure or terminate this Agreement. If after such additional period, the
defect is still not cured, or PGRLP does not commit to do so by
Closing, ▇▇▇▇ shall terminate this Agreement or waive the defect. Any
termination pursuant to this Section shall result in return of the
▇▇▇▇▇▇▇ money deposit(s) to ▇▇▇▇. PGRLP shall be required to cure any
such objectionable matter which is ascertainable in amount (such as a
mechanic's lien) that can be cured by the payment of money (not to
exceed a total of $2,500,000.00), to attempt to cure any objectionable
matter that renders title unmarketable and to make a good faith and
diligent effort to cure any objectionable matter it undertakes to
attempt to cure. PGRLP agrees it will use commercially reasonable
efforts to keep title to the Real Property in the same condition it is
as of the effective date of the title commitment (except for (i)
defects which PGRLP may cure pursuant to this Section 6.1, and (ii)
Leases entered into by PGRLP in accordance with this Agreement. The
Title Insurance Company shall obtain reinsurance in such amounts and
with such companies as are requested by ▇▇▇▇, whose request will not be
unreasonably made. ▇▇▇▇ is to be given the right of direct access to
any one or more reinsurers at its election.
6.2 Policies. The title insurance commitment shall be brought down to a
current date at the time of Closing, and at Closing it shall be marked
down or endorsed by the Title Company. ▇▇▇▇ and PGRLP shall each
provide such copies of their documents of formation, resolutions and
good standing certificates as may be required of them in Schedule B-I
of the title commitments. The final title policy is not to contain the
standard printed exceptions normally contained in title policies. The
"gap" will be deleted from the commitment at Closing as will all items
listed in Schedule B-I. PGRLP shall pay all costs and expenses for
issuance of the title insurance commitment, and issuance of or the
endorsement of the owner's title insurance policy as provided herein.
Dearborn Center shall pay for any endorsements and/or title policies
required by the Lender. The final policy will contain affirmative
insurance endorsements, insuring that none of the restrictions
applicable to the Real Property has been violated to date and that a
future violation will not result in a reversion or forfeiture of title
and shall contain such other endorsements (such as but not limited to
zoning endorsement, survey endorsement, contiguity endorsement, tax
parcel endorsement) as ▇▇▇▇ may reasonably request on or prior to the
Title Objection Date.
ARTICLE 7
SURVEY
7.1 Existing Surveys and Updates. As part of the Property Materials, PGRLP
will deliver to ▇▇▇▇ an existing as-built survey of the Real Property
under seal of a surveyor licensed in Illinois. Prior to the expiration
of the Investigation Period, ▇▇▇▇ may have the survey updated or redone
by the same or another surveyor (reasonably acceptable to PGRLP) under
current date so that the standard survey exceptions are removed from
the title policy. If the existing or updated survey shows any
encroachment on the Real Property surveyed, or that improvements
located on the Real Property surveyed in fact encroach on lands of
others or violate any of the applicable setbacks or restrictive
covenants, or that there is not access to the Real Property surveyed
from a public road, or that there are any gaps, gores, hiatuses, or
overlaps, the same shall be treated as a title defect, and the
provisions and conditions of Section 6.1 above shall govern any
obligation of PGRLP to cure the title defect and any rights of ▇▇▇▇.
ARTICLE 8
MEMBERSHIP INTERESTS
8.1 Contribution. Prior to Closing, PGRLP will be the owner of all
membership interests in and to Dearborn Center. When Closing occurs and
▇▇▇▇ contributes the ▇▇▇▇ Invested Equity to Dearborn Center and the
Operating Agreement is entered into by ▇▇▇▇ and PGRLP, ▇▇▇▇ will own
seventy percent (70%) of the LLC Interests and PGRLP will own thirty
percent (30%) of the LLC Interests, subject to the terms and provisions
of the Operating Agreement. ▇▇▇▇ will be the Administrative Member as
defined in the Operating Agreement.
8.2 Capital Structure. Subject to the Holdback and to Section 3.1 above,
there will, at Closing, be a total of One Hundred Sixty-Six Million
Dollars ($166,000,000.00) in equity capital accounts in Dearborn
Center, consisting of the ▇▇▇▇ Invested Equity contributed by ▇▇▇▇ and
$49,200,000.00 representing the agreed upon value of PGRLP's thirty
percent (30%) LLC Interests, together with the additional capital
contributed under Section 8.3 below. This assumes the Approved Loan is
$270,000,000.00. If the Approved Loan is higher (but not to exceed
$290,000,000.00), the equity capital will be reduced proportionately
between PGRLP and ▇▇▇▇ on a dollar for dollar basis. Because of the
Holdback, ▇▇▇▇'▇ Invested Equity at Closing will initially be
$105,000,000.00 (plus $1,400,000.00 representing its share of a working
capital contribution pursuant to Section 8.3 below for a total of
$106,400,000.00) and PGRLP's Invested Equity at Closing will initially
be $45,000,000.00 (plus $600,000.00 representing its share of a working
capital contribution pursuant to Section 8.3 below for a total of
$45,600,000.00). Once the Leasing Condition is satisfied, ▇▇▇▇'▇
Invested Equity will increase by $9,800,000.00 (provided ▇▇▇▇
contributes the ▇▇▇▇ Earnout) and PGRLP's Invested Equity will increase
by $4,200,000.00.
8.3 Additional Capital. Additional capital of $2,000,000.00 will be
contributed at Closing to pay for any closing allocations or
adjustments, closing costs payable by Dearborn Center and a reserve for
operating capital for Dearborn Center, PGRLP and ▇▇▇▇ shall each
contribute in cash their respective thirty percent (30%) and seventy
percent (70%) shares thereof and their respective Invested Equity shall
be increased accordingly as set forth in Section 8.2 above.
8.4 Distributions. Distribution preferences to PGRLP and ▇▇▇▇ by Dearborn
Center will be determined as provided in the Operating Agreement.
8.5 Amendment to Organizational Documents. At Closing, the existing
operating agreement of Dearborn Center will be restated and amended to
read as set forth in the Operating Agreement.
8.6 Agreement with Respect to Contribution of ▇▇▇▇'▇ Invested Equity. Upon
Closing of the contribution by ▇▇▇▇ of ▇▇▇▇'▇ Invested Equity, and ▇▇▇▇
becoming the owner of 70% of the LLC Interests, and as a condition
thereof, the following will be provided:
A. Indemnification surviving Closing from PGRLP in the form attached
hereto as Exhibit XX indemnifying ▇▇▇▇ and Dearborn Center from
and against any and all claims that may be asserted against ▇▇▇▇
by creditors of Dearborn Center or other third parties making any
claim against ▇▇▇▇ or Dearborn Center for any alleged obligation
or liability arising from or related to events occurring prior to
Closing, except those which ▇▇▇▇ has specifically agreed pursuant
to this Agreement are to remain in place and continue as
obligations of Dearborn Center.
B. Evidence of good standing in the state of Delaware for PGRLP and
Dearborn Center and in the state of Florida for ▇▇▇▇ (and
Illinois, if any of such entities are required to register to
transact business there) of PGRLP, Dearborn Center and ▇▇▇▇ and
resolutions and other evidence from such entities authorizing the
transactions contemplated under this Agreement.
C. A certified copy of the existing articles of organization of
PGRLP filed in Delaware, and ▇▇▇▇ filed in Florida, and the
qualification documents filed in Illinois, if any. The materials
in this paragraph C (other than for ▇▇▇▇) will be provided by
PGRLP as part of the Property Materials and will be updated at
Closing.
ARTICLE 9
REPRESENTATIONS AND WARRANTIES
9.1 Representations and Warranties of PGRLP. PGRLP hereby represents and
warrants all of following to ▇▇▇▇, which are true and correct as of the
Effective Date and, subject to the provisions of Section 9.4 below,
will be true and correct as of the date of Closing, and all of such
representations and warranties shall survive Closing for a period of
twenty-four (24) months:
A. Each of PGRLP and Dearborn Center is a duly formed and validly
existing limited partnership or limited liability company, as the
case may be, under the laws of the State of Delaware, and each
is, if required by law, duly qualified to transact business in
the State in which the Project is located. All appropriate
resolutions and authorizations precedent to such parties'
authority and power to execute this Agreement and perform their
obligations hereunder have been, or will prior to Closing be,
properly and duly taken.
B. To PGRLP's actual knowledge there are no, and as of the Effective
Date PGRLP and Dearborn have not received any notice of any,
impact fees or hook up fees which will be due or payable by ▇▇▇▇
or Dearborn Center after Closing hereunder to any utility company
or supplier, or governmental or quasi-governmental authority as a
result of or in connection with development of any portion of the
Project.
C. The legal description which is attached to this Agreement as
Exhibit "V" describes the Real Property (other than the
improvements thereon) fully and does not omit any portion
thereof. The information set forth in the definition of "Project"
herein is accurate in all material respects.
D. To PGRLP's actual knowledge (i) there are no violations by PGRLP
or Dearborn Center of any copyrights, trademarks or tradenames
with respect to any of the Personal Property, and (ii) no claims
have been asserted against Dearborn Center or PGRLP with respect
to the use of the name "Bank One Center". Dearborn Center is
obligated under the Bank One Lease to use said name.
E. To the actual knowledge of PGRLP, none of the Property Materials
delivered or to be delivered to ▇▇▇▇ contain any material
misstatements or material omissions.
F. All service contracts, leases (other than tenant Leases) and
other contracts of any kind or nature which will be binding upon
Dearborn Center after the Closing are for $10,000.00 or less per
contract or are terminable on 30 days' notice or less (except as
may be listed on Exhibit "VIII" attached hereto or disclosed in
the title insurance commitment or except as permitted in Section
10.2 below).
G. Except as set forth on Exhibit "IX", Dearborn Center has received
no written notice of any violations by any portion of the Project
from any governmental agency or authority, all permits and
governmental authorizations which are appropriate or necessary
for construction and operation of the Project in its present
state of condition have been duly issued and are in full force
and effect, and PGRLP and Dearborn Center have no actual
knowledge that would reasonably lead them to believe that
building permits for the vacant space in the Project will not be
routinely issued upon submissions of plans and specifications for
tenant improvements which are in compliance with any governmental
requirements.
H. To Dearborn Center's and PGRLP's actual knowledge, except as
disclosed in Dearborn Center's existing environmental reports
delivered or to be delivered by Dearborn Center to ▇▇▇▇
hereunder, there is no contaminant, pollutant or toxic or
hazardous waste, substance or gas or any toxic mold in, on,
under, over or affecting any part of the Real Property, its water
supplies or its air quality and no adverse environmental
condition which is in violation of any local, state or federal
environmental law with respect to the Property or any part
thereof.
I. No brokerage commission or compensation of any kind is due or
will be due from ▇▇▇▇, Dearborn Center or the Project or the
rents therefrom with respect to any of the Existing Leases,
except as set forth on Exhibit "X" attached hereto. Leasing
commissions for Leases entered into after the date hereof shall
be governed by the provisions of Section 10.2 hereof.
▇. ▇▇▇▇▇▇▇▇ Center and PGRLP have no actual knowledge of any pending
or contemplated condemnation or eminent domain proceeding or of
any moratorium imposed by any governmental or quasi governmental
authority or utility supplier affecting any portion of the
Project.
K. To Dearborn Center's and PGRLP's actual knowledge, there are no
third party claims pertaining to or affecting the Property,
Dearborn Center or the LLC Interests in any material respect
except for (i) rights of tenants arising under the Leases; (ii)
rights of the Lender that will exist under the Approved Loan
documents; (iii) rights of parties under contracts listed on
Exhibit "VIII" attached hereto and contracts referred to in
paragraph F above; (iv) slip and fall and similar claims covered
by insurance maintained by Dearborn Center; (v) rights of parties
that will be reflected in the title insurance commitment and/or
existing title policy delivered by PGRLP to ▇▇▇▇ hereunder; (vi)
those related to trade payables in the ordinary course of
business (none of which will be delinquent and all of same
pertaining to the period prior to Closing will be fully paid and
satisfied by PGRLP); and (vii) those matters, if any, set forth
on Exhibit "XV" attached hereto.
L. Except for leasing or financing arrangements entered into in the
ordinary course of business and taken into account in the
operating expenditures of the Project in the financial
information delivered by PGRLP to ▇▇▇▇ or entered into after the
Effective Date in accordance with the provisions of Section 10.2
hereof, and except for rights of architects and engineers in the
plans and specifications, Dearborn Center is the owner of the
Personal Property free and clear of all liens, third party claims
and encumbrances except for security interests therein incident
to existing financing for the Project (which will be released at
or prior to Closing) and except those pertaining to the Approved
Loan.
M. To the extent needed, all electricity, telephone, gas, drinking
water, water for fire purposes, sanitary sewage and storm
drainage capacity in sufficient quantity to service the Project
and its present and future tenants adequately is available to the
Real Property and is fully hooked up and operable without payment
by Dearborn Center or the Project after Closing hereunder of any
impact, hook up or connection fees except as set forth on Exhibit
"XI" attached hereto, and all necessary and appropriate approvals
for same have been obtained. The only fees, other than those
identified on Exhibit "XI" attached hereto payable by Dearborn
Center in connection with such utilities after Closing shall be
normal usage fees.
N. All entrances and curb cuts for the Real Property reflected on
the as-built survey have been approved, if so required, by all
governmental and quasi-governmental bodies having jurisdiction
thereover, and any road construction, installation of traffic
signals, signage or other off-site improvements which may have
been required as a result of construction or operation of the
Project have been fully completed and paid for.
O. Unless otherwise disclosed in the title commitment, and except
for real estate taxes, Dearborn Center and PGRLP have no actual
knowledge of any pending governmental or quasi-governmental
assessment liens or of any planned improvements that might result
in any assessments being levied by a governmental or
quasi-governmental authority against the Project.
P. There are no collective bargaining or union agreements with any
employee of Dearborn Center, and no employee contracts or
relationships exist which will be binding upon Dearborn Center
after Closing except those listed on Exhibit "XII" attached
hereto, which Exhibit also contains a complete and accurate
statement of all employee benefits that will belong to such
employees after Closing.
Q. The Rent Roll attached as Exhibit "I" is a true, correct and
complete depiction in all material respects of those terms set
forth on the Rent Roll for all Existing Leases for the Project as
of the date of such Rent Roll, all of which are in full force and
effect, and to the actual knowledge of PGRLP there are no
material defaults thereunder by the landlord or tenant, except as
disclosed on Exhibit "XIII" attached hereto. To Dearborn Center's
and PGRLP's actual knowledge, all Existing Leases are valid and
enforceable in accordance with their terms. Except as disclosed
in the Existing Leases, no tenant thereunder will be entitled to
any concession or rebate after Closing. No tenant improvement
funds or allowances will be due from Dearborn Center after
Closing as to any Existing Lease, except for those tenant
improvement payments or obligations which are scheduled on
Exhibit "XIV" attached hereto, the amounts of which will be
escrowed at Closing with the Title Company by PGRLP pursuant to
the Existing Tenant Improvements and Citadel Cash Escrow
Agreement in the form attached hereto as Exhibit XIX; it being
understood that such escrow amount will not limit the liability
of PGRLP for such obligations as provided under this Agreement
and in Exhibit XX attached hereto. To Dearborn Center's and
PGRLP's actual knowledge, all spaces within the Project may
legally be occupied for the purposes for which they are leased.
R. Except as may be disclosed on Exhibit "XV" attached hereto,
Dearborn Center has received no written notice of any actions or
claims filed or threatened by anyone against the Real Property or
Personal Property, PGRLP or PGRLP's agents in connection with any
personal injury or property damage sustained by reason of the
development, use, occupancy or operation of the Project, other
than slip and fall and similar claims covered by insurance
maintained by Dearborn Center or any tenant.
S. At Closing, there will be no third-party claims pertaining to or
affecting any of the LLC Interests to be held by ▇▇▇▇ (except
those which may be created by or through ▇▇▇▇ or any of its
affiliates), all of which will vest in ▇▇▇▇ free and clear of all
third-party liens, claims and encumbrances (except for Permitted
Exceptions), but subject to the terms and provisions of the
Operating Agreement.
T. All income taxes, withholding taxes, franchise taxes and all
other liabilities of every kind and nature of Dearborn Center due
and payable prior to Closing will, upon conclusion of the
Closing, be fully paid and there shall be no material sums due or
owing to any third parties whatsoever except to the extent same
are fully disclosed in writing to ▇▇▇▇ at or prior to Closing in
an aggregate amount not to exceed $500,000.00, or if in excess of
$500,000.00, such sums will be deposited in escrow at Closing and
disbursed pursuant to the Existing Tenant Improvements and
Citadel Cash Escrow Agreement. PGRLP's indemnification contained
in Section 8.6B above will cover all such taxes and tax
liabilities due and payable prior to Closing hereunder.
U. The copies of the presently existing articles of organization and
operating agreement of Dearborn Center attached hereto as
composite Exhibit "XVI" are true, correct and complete copies of
the originals which are in full force and effect and are not
modified or amended except as indicated on Exhibit "XVI". There
are no members of Dearborn Center except Prime Dearborn, L.L.C.
and no members of Prime Dearborn, L.L.C. except PGRLP.
V. To the actual knowledge of PGRLP and Dearborn Center the amount
of the Citadel Cash Escrow will be sufficient for its intended
purpose.
W. The copy of the Redevelopment Agreement attached hereto as
Exhibit "VI" is a true, correct and complete copy of the original
which is unamended and unmodified except as shown on Exhibit "VI"
and is in full force and effect in accordance with its terms. To
the actual knowledge of PGRLP, there are no defaults by any party
under the Redevelopment Agreement and no facts exist which, with
the passage of time or giving of notice, would constitute a
default thereunder.
9.2 Actual Knowledge of PGRLP. As used in this Agreement, the terms
"knowledge" of or "actual knowledge of" or "receipt of written notice
by" PGRLP and/or Dearborn Center shall mean the actual knowledge of, or
a notice received by, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇▇"), ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ ("▇▇▇▇▇▇") and/or ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇") after due inquiry
of the on-site property manager for the Project. ▇▇▇▇▇▇▇▇▇ is
knowledgeable regarding leasing matters at the Project, ▇▇▇▇▇▇ is
knowledgeable regarding construction matters at the Project and ▇▇▇▇▇▇▇
is the general counsel of Prime Group Realty Trust, the managing
general partner of PGRLP. Neither PGRLP nor Dearborn Center shall have
any duty to conduct further inquiry in making the representations and
warranties set forth in Section 9.1 above and no knowledge of or notice
to any other person shall be imputed to PGRLP, Dearborn Center,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ or ▇▇▇▇▇▇▇.
9.3 Representations and Warranties of ▇▇▇▇. ▇▇▇▇ hereby represents and
warrants all of following to PGRLP and Dearborn Center, which are true
and correct as of the Effective Date and, subject to the provisions of
Section 9.4 below, will be true and correct as of the Closing date, and
all of such representations and warranties shall survive Closing for a
period of twenty-four (24) months:
▇. ▇▇▇▇ is a duly formed and validly existing limited liability
company under the laws of the State of Florida, and is or, prior
to Closing, will be duly qualified to transact business in the
State in which the Project is located if such qualification is
required by applicable law. All appropriate resolutions and
authorizations precedent to ▇▇▇▇'▇ authority and power to execute
this Agreement and perform its obligations hereunder have been
properly and duly taken.
B. There is no pending or to ▇▇▇▇'▇ knowledge threatened litigation,
arbitration or administrative proceeding involving ▇▇▇▇ or any of
its affiliates which could either (i) result in any lien
encumbering the LLC Interests to be held by ▇▇▇▇, or (ii) which
could have a material adverse effect upon the ability of ▇▇▇▇ to
perform its obligations under this Agreement and/or the Operating
Agreement.
▇. ▇▇▇▇ is knowledgeable, sophisticated and experienced in the
ownership and operation of, and investment in, mixed use downtown
office projects similar to the Project and intends to conduct a
thorough due diligence review of all material aspects of the
Property and the ownership and operation thereof by Dearborn
Center prior to the expiration of the Investigation Period.
Except as expressly set forth in this Agreement, neither Dearborn
Center, PGRLP, nor any real estate broker, agent or other
representative of PGRLP or Dearborn Center has made any
representations or warranties whatsoever regarding the
transactions contemplated by this Agreement or any fact relating
thereto, including, without limiting any representations or
warranties concerning the physical condition of the Property,
access, zoning laws, environmental matters, utilities, leases or
any other matter affecting the Property or Dearborn Center, which
have been or may be relied upon by ▇▇▇▇ in connection with this
Agreement or the Property. Except as otherwise provided in this
Agreement, upon Closing, ▇▇▇▇, in becoming an owner of LLC
Interests, will accept the Property "AS IS, WHERE IS" with all
faults.
D. No mortgage broker was or will be involved in obtaining the loan
described in the HELABA Loan Term Sheet.
9.4 Update. At the time of Closing, PGRLP and ▇▇▇▇ will update their
respective representations and warranties contained in Sections 9.1 and
9.3 by certification to the other party if they can truthfully do so.
If either PGRLP or ▇▇▇▇ cannot do so as to any paragraph in Section 9.1
or 9.3, respectively, then such party shall be in default hereunder
unless the inability to update a representation and warranty is the
result of actions of Dearborn Center permitted pursuant to Section 10.2
or if the inability to update arises from any event beyond the
reasonable control of PGRLP or ▇▇▇▇ (collectively "Excusable Reason").
If the inability to update as provided in this Section is solely the
result of Excusable Reason, the other party, as its sole remedy, shall
have the right to terminate this Agreement and in such event a refund
of the ▇▇▇▇▇▇▇ money deposits will be made to ▇▇▇▇.
9.5 Indemnification. PGRLP hereby agrees to indemnify and hold ▇▇▇▇ free
and harmless from and against all claims, costs and expenses incurred
by ▇▇▇▇ as a result of a material breach of or the material falsity of
any of the representations or warranties pursuant to Section 9.1 and,
in the event ▇▇▇▇ is made a party to any arbitration, mediation or
litigation as a result of such breach or falsity, PGRLP will pay all
the costs and expenses thereof including reasonable attorneys' fees.
▇▇▇▇ hereby agrees to indemnify and hold PGRLP and Dearborn Center free
and harmless from and against all claims, costs and expenses incurred
by PGRLP or Dearborn Center as a result of a material breach of or the
material falsity of any of the representations or warranties pursuant
to Section 9.3 and, in the event PGRLP and/or Dearborn Center is made a
party to any arbitration, mediation or litigation as a result of such
breach or falsity, ▇▇▇▇ will pay all costs and expenses thereof
including reasonable attorneys' fees. The provisions of this Section
9.5 will survive the Closing for a period of twenty-four (24) months.
ARTICLE 10
OPERATING COVENANT
10.1 Maintenance and Operations. PGRLP and Dearborn Center agree and
covenant that Dearborn Center will prior to Closing operate, manage and
maintain the Project in its present condition, normal wear and tear and
damage by casualty excepted, and to the same standards which Dearborn
Center has operated, managed and maintained the Project prior to the
Effective Date. Dearborn Center shall comply in all material respects
with all material obligations of the landlord under the Leases and all
other material agreements and contractual arrangements affecting the
Project by which Dearborn Center is bound. Dearborn Center shall
provide notice to ▇▇▇▇ of any written notice from any party alleging
that Dearborn Center is in material default in its obligations under
any of the Leases or under any permit or material agreement affecting
the Property or any portion or portions thereof as well as any other
written notices pertaining to or affecting the Project in any material
way received from any governmental or quasi-governmental body, utility
supplier or fire underwriter.
10.2 Contracts and Leasing. After the expiration of the Investigation Period
(and provided ▇▇▇▇ has not terminated this Agreement) no contract out
of the ordinary course of business for or on behalf of or affecting
Dearborn Center or the Project shall be negotiated or entered into
which is in excess of $10,000.00 or cannot be terminated on 30 days' or
less notice unless ▇▇▇▇ shall have approved same, which approval will
not be unreasonably withheld or delayed (and shall be deemed given if
written objection is not made within five (5) business days after
receipt of a request for such approval). After the expiration of the
Investigation Period (and provided ▇▇▇▇ has not terminated this
Agreement) any and all new Leases and renewals other than those
renewals of Existing Leases (the terms of which are contained in the
Existing Leases provided to ▇▇▇▇ as part of the Property Materials)
entered into from and after the Effective Date shall be subject to
▇▇▇▇'▇ prior approval, which approval shall not be unreasonably
withheld or delayed (and shall be deemed given if written objection is
not made within five (5) business days after receipt of a request for
such approval). All of such Leases and renewals shall be in the
ordinary course of Dearborn Center's business and shall be for a use
which is consistent with the present operations of the Project. Copies
of all Leases and modifications entered into by Dearborn Center after
the Effective Date shall be delivered to ▇▇▇▇ promptly after complete
execution thereof. In addition, Dearborn Center will advise and consult
with ▇▇▇▇ regarding any new Leases or material modifications of any
Existing Leases or new contracts which are in excess of $10,000 which
Dearborn Center intends to enter into after the Effective Date and
prior to the expiration of the Investigation Period, provided that ▇▇▇▇
shall have no approval rights over such matters. All leasing
commissions, including leasing commissions to third party brokers, and
tenant improvement costs and allowances for Leases entered into after
the Effective Date and prior to Closing in accordance with the
provisions of this Section 10.2 shall be paid out of the $22,500,000.00
reserve referred to in Section 1.2. After the expiration of the
Investigation Period (and provided ▇▇▇▇ has not terminated this
Agreement) Dearborn Center will not enter into any new personal
property leasing or financing arrangements without obtaining ▇▇▇▇'▇
prior written approval which will not be unreasonably withheld or
delayed (and shall be deemed given if written objection is not made
within five (5) business days after receipt of a request for such
approval).
10.3 Liabilities. Except as otherwise expressly provided hereunder or to the
extent closing adjustments and prorations have taken into account any
obligations, expenses, costs, liabilities or claims accruing for
periods before the Closing date and in any way pertaining to or arising
from the ownership or operation of either Dearborn Center or the
Project, PGRLP shall be responsible to pay the same when due. PGRLP
agrees to indemnify and save ▇▇▇▇ and Dearborn Center free and harmless
from all of such claims. This Section 10.3 will survive Closing.
Dearborn Center shall pay all such obligations, expenses, costs,
liabilities and claims first arising for periods on or after the
Closing date pertaining to or arising from the ownership or operation
of either Dearborn Center or the Project and shall indemnify and save
PGRLP free and harmless from all of such claims, unless such claims
arise from a breach by PGRLP or Dearborn Center of a representation and
warranty under this Agreement. Anything in this Agreement to the
contrary notwithstanding there shall not be any time limit on ▇▇▇▇'▇
ability to assert a claim against PGRLP for any unpaid taxes of
Dearborn Center due and payable prior to Closing hereunder or (except
for real estate and personal property taxes for the year 2003)
attributable to the period prior to Closing. In addition, PGRLP at its
cost (but utilizing funds from the Citadel Cash Escrow) will cause
Dearborn Center to fully perform the Landlord's Reimbursement
Obligations as defined in Section 43 of the Citadel Lease and the
amount of the Citadel Cash Escrow will not limit PGRLP's liability on
account thereof.
ARTICLE 11
CONDITIONS PRECEDENT
11.1 ▇▇▇▇'▇ Preconditions. The following are conditions precedent to ▇▇▇▇'▇
obligations under this Agreement and in the event any one or more of
such conditions in subparagraphs A, D, E, F, or G below are not in any
material respect met on or before the dates set forth (or the Closing
date if no other date is set forth), ▇▇▇▇ shall have the unqualified
right (which, if such failure of condition also constitutes a default
by PGRLP or Dearborn Center, shall be in addition to any other remedies
available to ▇▇▇▇ under this Agreement on account of PGRLP's default),
to terminate this Agreement and obtain from Escrow Agent a refund of
its ▇▇▇▇▇▇▇ money deposits. If one or more of the conditions precedent
in subparagraphs B, C, or H is not met, ▇▇▇▇'▇ sole remedy shall be to
extend the Closing date for a period not to exceed thirty (30) days, to
see if the condition can then be met or to terminate this Agreement (on
the applicable extended Closing date if the condition is still not met,
at ▇▇▇▇'▇ election) and obtain a refund of its ▇▇▇▇▇▇▇ money deposit(s)
from Escrow Agent:
A. Subject to the provisions of Section 9.4 above, the
representations and warranties of PGRLP and Dearborn Center shall
be true and correct in all material respects as of the Closing
date and Dearborn Center and PGRLP shall have performed in all
material respects all of their material obligations hereunder to
be performed at or prior to the Closing.
▇. ▇▇▇▇▇▇▇▇ Center will have obtained and delivered to ▇▇▇▇ estoppel
letters addressed to ▇▇▇▇ and Dearborn Center substantially in
the form required under the Leases, and if no specific form of
estoppel letter is required under any Lease, then substantially
in the form attached as Exhibit "IV" hereto, from all tenants who
have signed Leases for space in the Project in excess of 5,000
square feet.
C. There shall not be any local insurrection, war, disaster,
moratorium preventing tenants from operating, or other event
(other than a matter covered by Article 14 hereof) preventing the
Real Property from being occupied by a material number of tenants
with concurrent right to tenants not to pay rent.
D. Any and all loans made by PGRLP or any affiliates to Dearborn
Center will have been paid in full and will have been cancelled.
E. A balance sheet dated as of the date of Closing for Dearborn
Center shall be delivered to ▇▇▇▇ reflecting that the only assets
of Dearborn Center are the Property, the Leases pertaining
thereto, the contracts referred to in this Agreement and rights
under this Agreement, and those assets reflected on the pro forma
balance sheet ("Pro Forma Balance Sheet") attached hereto as
Exhibit "XVII". No liabilities are to be reflected on the balance
sheet other than liabilities that are being assumed pursuant to
this Agreement, if any, those liabilities reflected on the Pro
Forma Balance Sheet, those that will be paid and satisfied in
full by PGRLP as provided in Section 9.1(T) above, and those
which arise out of transactions or matters permitted under this
Agreement, including, without limitation, pursuant to Section
10.2 above.
▇. ▇▇▇▇▇▇▇▇ Center will have delivered to ▇▇▇▇ a certified copy of
its Articles of Organization filed in Delaware and the
qualification documents filed in Illinois for Dearborn Center.
G. UCC, tax lien and judgment searches on Dearborn Center and PGRLP
("UCC Searches") will be obtained by ▇▇▇▇ reflecting the absence
of any liens, security interests or encumbrances against Dearborn
Center, the LLC Interests and the Personal Property except for
(i) security interests against Dearborn Center incident to and
securing the Approved Loan, (ii) equipment and other Personal
Property leases otherwise permitted under this Agreement, (iii)
those that will be released at Closing, (iv) Permitted
Exceptions, and (v) those that have been insured or bonded over
by the Title Company, if ▇▇▇▇ has agreed in its reasonable
judgment to accept such insurance or bonding by the Title
Company.
H. An estoppel certificate addressed to ▇▇▇▇ and Dearborn Center as
to the Redevelopment Agreement in form reasonably satisfactory to
▇▇▇▇, will be provided by the City of Chicago ("City"), provided
that if after PGRLP uses commercially reasonable efforts to
obtain such certificate from the City, the City is not willing to
furnish such certificate, then PGRLP shall: (i) itself provide
such certificate, and (ii) include within the scope of the PGRLP
Indemnification Agreement (defined below), any liability and
obligations of Dearborn Center under the Redevelopment Agreement
which are incurred prior to Closing, which shall be deemed to
satisfy the condition set forth in this Subsection H.
11.2 PGRLP's Preconditions. The following are preconditions to PGRLP's
obligations under this Agreement and in the event the condition in
subparagraph A below is not met on or before the Closing date, ▇▇▇▇
shall be in default hereunder and PGRLP shall be entitled to avail
itself of the remedy provided in Article 17:
A. Subject to the provisions of Section 9.4 above, the
representations and warranties of ▇▇▇▇ shall be true and correct
in all material respects as of the Closing date and ▇▇▇▇ shall
have performed in all material respects all of its material
obligations hereunder to be performed at or prior to the Closing.
11.3 Mutual Preconditions. The following are preconditions to the
obligations of all parties to this Agreement and, if not met, will
entitle any party hereto as its sole remedy to terminate this
Agreement, in which case the ▇▇▇▇▇▇▇ money deposits paid by ▇▇▇▇ will
be refunded to ▇▇▇▇: (a) a binding commitment for the Approved Loan
containing the terms set forth in Section 1.2 above, including a fixed
rate of interest acceptable to both PGRLP and ▇▇▇▇ in their sole
discretion will have been obtained on or prior to the expiration of the
Investigation Period on the terms set forth in this Agreement or as
otherwise agreed to by ▇▇▇▇ and PGRLP in their sole discretion; (b) a
letter appraisal of the Project shall have been obtained by the Lender
on or before the expiration of the Investigation Period in an amount
which satisfies any appraisal condition required under the terms of the
Approved Loan; (c) the Approved Loan shall have closed on the date of
Closing pursuant to documents reasonably satisfactory to ▇▇▇▇ and
PGRLP; (d) if required under the Redevelopment Agreement, the consent
of the City to the transactions contemplated under this Agreement will
have been obtained at or prior to the expiration of the Investigation
Period; (e) Bank One shall have waived its right to purchase the
Project pursuant to Section 39 of the Bank One Lease ("Bank One ROFO")
on or before the date which is thirty-five (35) days after the
Effective Date; and (f) PGRLP and ▇▇▇▇ shall have agreed upon the
amount of the Existing Tenant Improvements Escrow prior to the
expiration of the Investigation Period. ▇▇▇▇ agrees to provide any
information requested by the City in connection with obtaining any
required consent from the City.
ARTICLE 12
CLOSING
12.1 Place, Time, Etc. Subject to satisfaction or waiver of the conditions
precedent to closing set forth in Article 11 above and the other
provisions of this Agreement, closing of the transactions contemplated
by this Agreement (the "Closing") shall take place in Chicago, Illinois
at the office of PGRLP's attorneys, or at such other place or in the
manner as the parties may mutually agree on a date selected by the
parties, but in no event later than October 15, 2003.
12.2 Documents, etc. by PGRLP. PGRLP and/or Dearborn Center, as appropriate,
shall cause copies of the form of all closing documents that are to be
prepared by them to be delivered to ▇▇▇▇ for review at least three (3)
business days prior to Closing. The documents and other materials to be
executed (where applicable) and delivered (where applicable) by PGRLP
for closing include:
A. Closing Statement.
B. Capital pursuant to Section 8.3
C. Indemnification made by PGRLP pursuant to Section 8.6, in the
form attached hereto as Exhibit "XX".
D. Affidavit of Dearborn Center typically required by the Title
Insurance Company.
E. Certificate updating representations and warranties in accordance
with Section 9.4.
F. Evidence of the authority of the PGRLP and Dearborn Center and,
if applicable, the constituent members thereof to act and limited
liability company (or other entity, if applicable) resolutions
authorizing the actions of all such parties.
G. Certificates of good standing of PGRLP and Dearborn Center in the
states of their organization and, if required by law, to qualify
to do business in the State of Illinois.
H. Updates of certified articles of organization of Dearborn Center
pursuant to Section 8.6C.
I. Estoppel letters from tenants per Section 11.1.(B).
J. Management Agreement.
K. Loan documents in connection with Approved Loan.
L. Operating Agreement of Dearborn Center pursuant to Section 8.5.
M. Documents to change the bank account or signatories on the bank
and other accounts of Dearborn Center.
N. Termination of present property management agreement.
O. Membership Certificate to ▇▇▇▇ for the LLC Interests in the form
attached as Exhibit "XVIII" attached hereto.
P. Special guaranties and indemnifications described in Section
12.4, in the form attached hereto as Exhibit XX.
Q. Resignation of all present managers and/or administrative
officers of Dearborn Center as such managers or administrative
officers.
R. Existing Tenant Improvements and Citadel Cash Escrow Agreement,
as provided in Section 12.4 below.
S. Evidence that Bank One has waived the Bank One ROFO.
12.3 Documents, etc. By ▇▇▇▇. ▇▇▇▇ shall cause copies of documents that are
to be delivered by ▇▇▇▇ to PGRLP at closing to be delivered to PGRLP
for review at least three (3) business days prior to Closing. The
documents and materials to be executed (where applicable) and/or
delivered (where applicable) by ▇▇▇▇ for closing include:
A. Evidence of the good standing and qualification to transact
business in the State of Florida and in the State of Illinois,
for ▇▇▇▇, if required by applicable law.
B. Evidence of authority of ▇▇▇▇ to act and resolution authorizing
the actions of the general partner signing on behalf of the ▇▇▇▇.
C. Sufficient immediately available funds to the Title Insurance
Company escrow account to complete the Closing and to satisfy the
contribution by ▇▇▇▇ of the ▇▇▇▇ Invested Equity.
D. Operating Agreement of Dearborn Center pursuant to Section 8.5.
E. Documents in connection with the Approved Loan.
F. Certificate updating representations and warranties in accordance
with Section 9.4.
G. Earnout Guaranty.
H. Existing Tenant Improvements and Citadel Cash Escrow Agreement,
as provided in Section 12.4 below.
12.4 Special Guaranties and Indemnifications. At Closing, PGRLP shall (A)
deposit in the Existing Tenant Improvements Escrow, to the extent not
previously funded, all completion costs for shell and core of the
Project and all costs related to tenant improvements and allowances
with respect to the Existing Leases, as reflected on Exhibits X and XIV
attached hereto, and (B) deposit $14,645,000.00 in the Citadel Cash
Escrow to secure the Landlord Reimbursement Obligations in connection
with the Citadel Lease, both pursuant to an escrow agreement in the
form attached hereto as Exhibit "XIX" ("Existing Tenant Improvements
and Citadel Cash Escrow Agreement"), which such Escrow Agreement will
permit PGRLP and Dearborn Center to use the funds in the Citadel Cash
Escrow to satisfy the Landlord Reimbursement Obligations and the funds
in the Existing Tenant Improvements Escrow to satisfy PGRLP's
obligations under clause A of this Section 12.4. PGRLP will also
execute an indemnification agreement ("PGRLP Indemnification
Agreement") in the form attached hereto as Exhibit "XX", agreeing to
hold Dearborn Center and ▇▇▇▇ free and harmless from all obligations
arising under clauses A and B of this Section 12.4 and neither the
amount of the Citadel Cash Escrow nor the amount of the Existing Tenant
Improvements Escrow shall be the limit of PGRLP's liability with
respect to PGRLP's obligations under clauses A and B of this Section
12.4. In the event there are any funds left in the Existing Tenant
Improvements Escrow or Citadel Cash Escrow after PGRLP's obligations
under clauses A and B of this Section 12.4 are completed, PGRLP shall
be entitled to return of same. The PGRLP Indemnification Agreement
shall also include the agreement of PRLP to indemnify ▇▇▇▇ and Dearborn
Center with respect to any liability regarding the Bank One Rights, all
of which shall be assumed at Closing by PGRLP, and ▇▇▇▇ shall have
setoff rights with respect thereto, as provided in the Operating
Agreement.
12.5 Further Documents. ▇▇▇▇, PGRLP and Dearborn Center each agree to
execute all the documents reasonably contemplated by this Agreement to
be executed by them to complete Closing hereunder and such further
documents and instruments and to deliver to each other such further
materials in their possession at Closing (or thereafter if forgotten at
Closing or if the need did not become apparent until after Closing) as
may be reasonably necessary or appropriate to accomplish the purpose
and intent hereof. All such documents are subject to the approval of
PGRLP and ▇▇▇▇, which approval will not be unreasonably withheld or
delayed.
ARTICLE 13
CLOSING ADJUSTMENTS AND PRORATIONS
13.1 The following items are to be apportioned at Closing in an equitable
manner as of 11:59 p.m. on the last day immediately preceding the day
on which the Closing occurs (the "Adjustment Date") so that the income
and expense items with respect to the period on and prior to the
Adjustment Date will be for the account of Dearborn Center prior to the
time when ▇▇▇▇ becomes a member and the income and expense items with
respect to the period after the Adjustment Date will be for the account
of Dearborn Center after the time that ▇▇▇▇ becomes a member:
A. Rents and additional rents, and all other receipts such as
parking fees, supervision and construction fees and similar
items, as and when collected. If at the time of the Adjustment
Date there are basic rents owed by tenants that have not been
collected by Dearborn Center and are applicable to any period of
time prior to the Adjustment Date, PGRLP shall deliver to ▇▇▇▇ a
schedule of such uncollected rents, and ▇▇▇▇ agrees that such
rents, if and when collected, shall be paid by Dearborn Center to
PGRLP. Rents collected by Dearborn Center shall be applied first
to then current rents on a tenant by tenant basis, and only after
they have been paid will application be made to past-due rents
and then in reverse order of accrual. Notwithstanding anything to
the contrary set forth in this Article 13, the payments to be
made by Bank One and Citadel representing such tenant's
proportionate share of the second installment of the 2002 real
estate taxes (due in 2003) required to be paid under the Bank One
Lease and Citadel Lease, respectively, shall be paid to PGRLP,
regardless of whether such payments are received prior to or
after the Closing.
Any percentage rentals received after the Closing date and
attributable entirely or in part to a period before the Closing
date shall be allocated between Dearborn Center and PGRLP such
that PGRLP's share with respect to each tenant shall be an amount
equal to the total percentage rentals received for such tenant's
lease year, multiplied by a fraction equal to that portion of
such tenant's lease year preceding the closing date. Prorated
percentage rentals will be paid by the party receiving the
percentage rentals from the tenants within ten days after
receipt, as and when received.
Payments of utility, common area, sprinkler, insurance, and other
charges (including, without limitation, sewer charges, insurance,
and marketing fund or promotion fund charges, if any) from
tenants shall be apportioned in an equitable manner.
B. Real estate taxes (for 2002 and prior years) and annual
installments of special assessments, and other state, county or
city taxes or assessments, if any, due and payable in 2003 and
for any prior years shall have been paid at or prior to Closing
by PGRLP. There shall be no prorations of any real estate taxes
or special assessments.
C. Amounts paid or payable in respect of any service contracts that
remain in effect and all costs and expenses incurred in common
area maintenance charges, or insurance charges attributable to
vacant space in the Project. Following issuance of any annual
reconciliations to the tenants of the Project and receipt of any
reconciliation payments due from the tenants, ▇▇▇▇ and PGRLP
shall readjust the items under this paragraph C and the
corresponding income items under paragraph A.
D. Water, electricity, oil, gas, steam, telephone, sewer and other
utilities based on actual charges when final meter readings have
been obtained or actual expenses determined. PGRLP, to the extent
current readings are available, shall endeavor to furnish
readings made on or immediately prior to the Adjustment Date.
E. Wages and payroll taxes, vacation pay and fringe benefits for
employees of Dearborn Center, if any, to be retained after
Closing.
F. Such other apportionments and adjustments as are customarily
apportioned upon transactions similar to those contemplated by
this Agreement, including any applicable adjustments with respect
to the Redevelopment Agreement.
G. Interest on any escrows or deposits that will remain after
Closing.
ARTICLE 14
RISK OF LOSS
14.1 Damage. If the improvements at the Project are damaged by fire or other
casualty prior to Closing, then the following provisions shall apply.
PGRLP shall promptly notify ▇▇▇▇ of the occurrence of the fire or other
casualty. If the cost of restoring the damage, as reasonably estimated
by the contractor selected by PGRLP to perform the restoration, is less
than an amount which is ten percent (10%) of the total replacement cost
for the Project, and if the income from the Property is not materially
adversely affected (either because tenants continue to pay rent and
other charges, insurance covers any loss of income and/or PGRLP makes
up any shortfall to Dearborn Center) then, PGRLP shall cause Dearborn
Center to proceed to restore the Project provided there is made
available by the existing lenders of Dearborn Center and PGRLP,
sufficient insurance proceeds for such restoration and Closing shall
occur as scheduled hereunder. If restoration cannot be completed within
one hundred eighty (180) days after the Closing date set forth herein,
as reasonably estimated by the contractor selected by PGRLP to perform
the restoration, ▇▇▇▇ may terminate this Agreement by giving written
notice to PGRLP within 30 days after PGRLP notifies ▇▇▇▇ of such
casualty and of the estimated time and cost of restoration. If the cost
of restoring the damage is an amount which is ten percent (10%) of the
total replacement cost for the Project or more, as reasonably estimated
by the contractor selected by PGRLP to perform the restoration, then
▇▇▇▇ or PGRLP may terminate this Agreement by giving notice to PGRLP
within thirty (30) days after PGRLP notifies ▇▇▇▇ of such casualty and
the ▇▇▇▇▇▇▇ money deposits shall be returned to ▇▇▇▇.
14.2 Taking. In the event there shall be a threatened, pending or completed
exercise of the power of eminent domain or deed in lieu thereof of any
material or substantial portion of the Project, either PGRLP or ▇▇▇▇
shall have the option, to be exercised within 30 days after ▇▇▇▇ is
given written notice thereof, to terminate this Agreement.
14.3 Termination. Upon any termination under this Article 14, ▇▇▇▇ shall be
refunded its entire ▇▇▇▇▇▇▇ money deposit(s) and neither party shall
have any further liability to the other under this Agreement, except
that the indemnification and repair obligations of ▇▇▇▇ under Section
4.4 shall survive.
ARTICLE 15
EXPENSES
15.1 PGRLP's Expenses. PGRLP shall pay all documentary stamps and/or
transfer or recording taxes, if any, in connection with the
transactions described herein, the cost of the title insurance
commitment and the owner's title insurance policy premiums and
endorsements thereto and the costs of updating the survey, and half of
any Closing escrow fees charged by the Title Company. Dearborn Center
will pay all costs, fees and expenses associated with closing the
Approved Loan; and the cost of any mortgagee's title policy.
15.2 ▇▇▇▇'▇ Expenses. ▇▇▇▇ shall pay ▇▇▇▇'▇ Counsel fees; any of ▇▇▇▇'▇
Investigation Period studies and tests; the costs of any UCC Searches,
and half of any Closing escrow fees charged by the Title Company.
ARTICLE 16
MANAGEMENT AGREEMENT
16.1 Management Agreement. As an inducement to ▇▇▇▇ and to PGRLP to enter
into this Agreement, ▇▇▇▇ and PGRLP have agreed that the Project will
be managed on behalf of Dearborn Center in accordance with the terms of
the Management Agreement.
ARTICLE 17
DEFAULT
17.1 If ▇▇▇▇ shall default in ▇▇▇▇'▇ obligations under this Agreement in any
material manner, the ▇▇▇▇▇▇▇ money deposit(s) paid to date by ▇▇▇▇
together with any interest that may have been earned thereon, shall be
paid to PGRLP as full, complete and liquidated damages in full
settlement of any and all claims hereunder, whereupon all parties shall
be released of all obligations under this Agreement. If PGRLP or
Dearborn LLC shall default in any of their obligations under this
Agreement in any material manner, ▇▇▇▇ may elect as its sole and
exclusive remedies to (i) terminate this Agreement and obtain a refund
of its ▇▇▇▇▇▇▇ money deposit(s) or (ii) ▇▇▇▇ may avail itself of
specific performance, and recover actual damages in a maximum amount
equal to the amount of the ▇▇▇▇▇▇▇ money deposits then being held
pursuant to this Agreement.
ARTICLE 18
BROKERAGE COMMISSION
18.1 No Broker. Any payments made to any brokers or consultants related to
this Agreement shall not be deemed to be part of either party's
Invested Equity. PGRLP hereby agrees to hold ▇▇▇▇ and Dearborn Center
free and harmless from all brokerage, consulting, finders or similar
claims made by any entity claiming through or as a result of dealings
with PGRLP or PGRLP's affiliates. ▇▇▇▇ hereby agrees to hold PGRLP and
Dearborn Center free and harmless from all brokerage, consulting,
finders or similar claims made by any person or entity claiming through
or as a result of dealings with ▇▇▇▇ or ▇▇▇▇'▇ affiliates. The
provisions of this Section shall survive Closing hereunder and shall
survive any termination of this Agreement.
ARTICLE 19
SURVIVAL OF CERTAIN PROVISIONS
19.1 Wherever in this Agreement obligations of any party are stated to
survive Closing hereunder, such obligations shall survive Closing and
delivery of the Closing documents, subject to any limitations on the
period of survival set forth in this Agreement.
ARTICLE 20
NOTICES
20.1 How Given. All notices hereunder shall be written and shall be deemed
given upon receipt thereof or, if receipt is refused, upon the date of
refusal. Notices shall be valid if delivered by any of the following
means: certified mail, return receipt requested; telecopier; hand
delivery or delivery by bonded courier, or reputable overnight delivery
services.
20.2 Notices to PGRLP and Dearborn Center shall be sent to PGRLP at the
address set forth at the beginning of this Agreement with copies to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Executive Vice President and General Counsel
Prime Group Realty Trust
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Jenner & Block
▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
20.3 To ▇▇▇▇. Notices to ▇▇▇▇ shall be sent to ▇▇▇▇ at the address set
forth at the beginning of this Agreement with copies to:
▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇ ▇▇▇▇▇ Ciklin ▇▇▇▇▇▇ Martens ▇▇▇▇▇▇ &
▇'▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No. ▇▇▇-▇▇▇-▇▇▇▇
20.4 Change. Any party may change its address or telecopier number for
notices by giving due notice of such change to the other party hereto.
ARTICLE 21
INTENTIONALLY DELETED
ARTICLE 22
MISCELLANEOUS
22.1 Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their successors and permitted
assigns; provided, however, no party hereto may assign this Agreement
without the prior written consent of the other party, which, except as
may otherwise expressly provided herein, may be withheld in the sole
discretion of the non-assigning party. Notwithstanding the foregoing,
▇▇▇▇ may, without consent of PGRLP, assign this Agreement to an entity
which is controlled by the principals of ▇▇▇▇ or ▇▇▇▇ itself provided
that no such assignment shall release ▇▇▇▇ from any liability
hereunder. This Agreement may be executed in multiple counterparts and,
when executed by all parties, shall constitute one agreement effective
and binding on all parties.
22.2 Severability. In the event of the invalidity of any provision hereof,
same shall be deemed stricken from this Agreement, which shall continue
in full force and effect as if the offending provision were never a
part hereof.
22.3 Pronouns. Use of pronouns or nouns in any form where they appear in
this Agreement shall be read as either masculine, feminine or neuter
and either singular or plural wherever the context and facts permit.
22.4 Headings and Exhibits. Article, Section and paragraph headings are
inserted solely for ease of reference and shall not be construed to
enlarge, modify or limit the provisions hereof. References to numbered
or lettered Articles, Sections or paragraphs refer to Articles,
Sections and paragraphs of this Agreement unless specified to the
contrary. References to Exhibits are to the Exhibits attached hereto
which are, by this reference, made a part hereof.
22.5 Time of the Essence. Time is of the essence hereunder. However, if any
due date hereunder falls on a Saturday, Sunday or nationally-recognized
holiday, the due date shall be the first day thereafter which is not a
Saturday, Sunday or holiday.
22.6 Attorneys' Fees. In the event of any litigation arising out of this
Agreement, the prevailing party shall be entitled to reimbursement of
the costs and expenses thereof from the other party or parties,
including reasonable attorneys' fees and including such costs, expenses
and fees incurred on appeals of such litigation.
22.7 Construction of Agreement. The parties agree that this Agreement was
prepared jointly by them and shall be construed on a parity as between
the parties. There shall be no canon of construction for or against any
party by reason of the physical preparation of this Agreement.
22.8 Effect of Words. Wherever the word "including" appears in this
Agreement, it shall be deemed to mean "including, without limitation"
if the context permits.
22.9 No Amendment. No amendment, modification, change or alteration of this
Agreement shall be valid or binding unless in writing and signed by all
the parties.
22.10 No Agency. Nothing in this Agreement shall be deemed to create an
agency relationship between PGRLP and ▇▇▇▇. The relationship of the
parties is strictly that of a PGRLP and a ▇▇▇▇.
22.11 Governing Law/Venue. All matters involving this Agreement shall be
governed by and construed in accordance with Illinois law. All legal
actions under this Agreement shall be taken in a court of competent
jurisdiction within ▇▇▇▇ County, Illinois, the county were both the
principal place of business of Dearborn Center and the Property is
located, and the parties hereby waive and agree that they shall not
assert that such forum is inconvenient.
22.12 Entire Agreement. Except for a Confidentiality Agreement between PGRLP
and an affiliate of ▇▇▇▇ dated June 27, 2003, which shall survive
execution hereof, this Agreement is the only agreement among the
parties and/or their affiliates pertaining to the Project, Dearborn
Center and the LLC Interests and all prior negotiations and agreements
with respect thereto (except those specifically mentioned above) are
merged herein. ▇▇▇▇ hereby assumes all of the obligations of its
affiliate under such Confidentiality Agreement.
22.13 Faxes. Faxed signatures hereon shall be binding as if they were
originals.
22.14 Obligations. All obligations of PGRLP and Dearborn Center hereunder are
joint and several.
22.15 German Interests. PGRLP acknowledges that ▇▇▇▇ may syndicate in Germany
ownership interests in ▇▇▇▇, but not any LLC Interests (the
"Syndication"). ▇▇▇▇ hereby agrees to indemnify, defend and hold PGRLP
and Dearborn Center harmless from and against any and all claims,
liabilities, damages, expenses (including reasonable attorneys' fees)
and losses which either or both of PGRLP or Dearborn Center may incur
by reason of or related to the Syndication, which such obligation of
▇▇▇▇ shall survive the Closing. PGRLP and all affiliated and related
entities under PGRLP's control (all collectively called "Restricted
Parties") agree that they will not during the term of this Agreement,
negotiate with or discuss the Property, or this transaction with any
"Germans" as defined below (unless as part of a "Company Transaction",
as defined below). If this Agreement expires or is terminated or if it
is validly terminated by PGRLP or by ▇▇▇▇ prior to Closing other than
by reason of a default by ▇▇▇▇ hereunder and if any of the Restricted
Parties should within a period of twelve (12) months after expiration
or termination of this Agreement, then close a transaction (other than
with respect to a Company Transaction) with any Germans related to or
pertaining to the Property or Dearborn Center, then, in such case,
PGRLP shall pay to ▇▇▇▇ an amount equal to one and one-quarter percent
(1.25%) of the total value (defined as the funds being provided by the
Germans) of the transaction closed with the Germans (the "Stipend").
The Restricted Parties shall not, during the term of this Agreement,
seek to involve any Germans in the ownership of the Property or
Dearborn Center or in a participation with PGRLP or other Restricted
Parties in any manner relating to the Property or Dearborn Center
without ▇▇▇▇'▇ consent (other than with respect to a Company
Transaction). In the event any of the Restricted Parties violates the
provisions of the immediately preceding sentence and close a
transaction relating to the Property or Dearborn Center with any
Germans (other than with respect to a Company Transaction), PGRLP shall
pay the Stipend to ▇▇▇▇. For purposes of this paragraph, the term
"Germans" means any party or parties that meet the following test: is
(a) a business entity or trust formed under the laws of Germany, (b) a
German resident or citizen or (c) an entity (other than a publicly
traded entity that is formed under the laws of a nation other than
Germany) that is known by PGRLP to be at least 25% owned by German
entities and/or German residents or citizens. Notwithstanding anything
to the contrary set forth in this Section 22.15, the Restricted Parties
will be permitted at any time without liability for the Stipend or
otherwise being considered in violation of this Section 22.15 to
discuss with and to close on any mortgage and/or mezzanine financing
involving the Center with any German bank or other German financial
institution that does not involve equity participation by such bank or
financial institution or any of their affiliates. A "Company
Transaction" shall mean any issuance of interests in PGRLP and/or its
partners or in connection with any merger, consolidation,
reorganization, sale, liquidation or other similar transaction with
respect to PGRLP, any of its partners, affiliates or related parties.
22.16 Exhibits. The parties acknowledge that none of the exhibits
("Exhibits") hereto (other than Exhibits III, XXI and XXII) have been
finalized, agreed to by the parties or attached hereto as of the
Effective Date. PGRLP shall provide Exhibits I, IV, V, VI, VII, VIII,
IX, X, XI, XII, XIII, XIV, XV, XVI, XVII, and XVIII within ten (10)
business days after the Effective Date. PGRLP and ▇▇▇▇ shall use good
faith efforts to finalize and agree upon Exhibits II, XIX, XX and XXIII
within ten (10) business days after the Effective Date and if they are
not able to reach agreement on the final form of any of such Exhibits,
then, notwithstanding anything to the contrary set forth in this
Agreement, either PGRLP or ▇▇▇▇ may terminate this Agreement as its
sole remedy and in such event the ▇▇▇▇▇▇▇ money deposit(s) shall be
returned to ▇▇▇▇.
22.17 Confidentiality. PGRLP and ▇▇▇▇ acknowledge and agree that the
transaction contemplated by this Agreement is of a highly sensitive and
confidential nature and, except to the extent disclosure is required by
law or is otherwise permitted by this Section 22.17, ▇▇▇▇ and PGRLP
agree that all documents and information concerning the Property and
Dearborn Center received by ▇▇▇▇, the subject matter of this Agreement
and all negotiations with respect hereto and the subject matter hereof
shall remain confidential. Prior to and after the Closing of the
transaction contemplated by this Agreement, any release or disclosure
to the public of information with respect to the transaction
contemplated herein, any matters set forth in this Agreement, or any of
the terms and provisions of this Agreement shall be made only in the
form approved by ▇▇▇▇ and PGRLP and their respective counsels (which
approval shall not be unreasonably withheld or delayed, and shall be
deemed to have been approved if not expressly disapproved within three
(3) business days after request for approval). Notwithstanding the
foregoing to the contrary, this Section 22.17 shall not prevent (a)
either party from disclosing any information with respect to the
transaction contemplated herein, any matters set forth in this
Agreement, or any of the terms and provisions of this Agreement if and
to the extent that such disclosure is required by applicable law or a
court or other binding order or by applicable administrative rule or
regulation or order of any regulatory or supervisory agency or
authority with competent jurisdiction over such matter (in which case,
the disclosing party shall advise the other party of its intention to
disclose such information (unless prohibited by applicable law) and
permit the non-disclosing party to attempt to obtain a protective court
order with respect thereto), (b) PGRLP or ▇▇▇▇ from disclosing any
information with respect to the transaction contemplated herein, any
matters set forth in this Agreement, or any of the terms and provisions
of this Agreement to any of their respective, current, or prospective
lenders, members, officers, directors, trustees, employees,
consultants, advisors, agents, representatives, partners and/or
shareholders (and any of the respective lenders, members, officers,
directors, trustees, employees, consultants, advisors, agents,
representatives, partners and/or shareholders of any such parties);
provided that all of the foregoing are advised of the confidential
nature of such information, matters, terms and provisions, and agree to
be bound by the terms and conditions of this Section 22.17 for the
benefit of both PGRLP and ▇▇▇▇, (c) PGRLP and/or Prime Group Realty
Trust from making any public statement, filing or other disclosure
which any of them reasonably believes to be required or desirable under
applicable securities laws or in connection with any securities
offering or registration by PGRLP and/or Prime Group Realty Trust, or
as may be requested or required by the New York Stock Exchange or other
securities market, or (d) ▇▇▇▇ from making releases of or disclosing
information pertaining to the transaction contemplated herein in
connection with its syndication, but only if such releases and
disclosure occur in Germany. Notwithstanding any statement to the
contrary in this Agreement, the confidentiality requirements of this
Section 22.17 shall not apply to the tax treatment and tax structure of
the transactions contemplated by this Agreement, provided that (i) no
person may disclose information identifying the parties to the
transactions contemplated hereby, and (ii) no person may disclose any
nonpublic commercial or financial information. The provisions of this
Section 22.17 shall survive the Closing of the transaction contemplated
by this Agreement or termination of this Agreement (whichever shall
occur) without restriction or limitation.
IN WITNESS WHEREOF, this Agreement has been executed as of the day and
year first above written.
In the Presence of: PGRLP:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ PRIME GROUP REALTY, L.P., a Delaware
----------------------------- limited partnership
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------
By: Prime Group Realty Trust,
A Maryland real estate investment
trust, its managing general partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
Printed Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
Title: Chairman
------------------------------------
▇▇▇▇:
▇▇▇▇ CHICAGO, L.C., a Florida
limited liability company
By: Estein Management Corporation,
a Florida corporation, its manager
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------
By:/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇ ▇▇▇▇▇ ---------------------------------
---------------------- ▇▇▇▇▇▇ ▇▇▇▇▇▇, President
JOINDER
Dearborn Center, L.L.C. joins in this Agreement for the purpose of
agreeing to be bound by the provisions hereof which expressly pertain to it.
DEARBORN CENTER, L.L.C., a Delaware limited
liability company
By: Prime Dearborn, L.L.C., a Delaware
limited liability company, its sole member
By: Prime Group Realty, L.P., a Delaware
limited partnership, its sole member
By: Prime Group Realty Trust, a Maryland
real estate investment trust,
its managing general partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------
Its: Chairman
-------------------------
SCHEDULE OF
EXHIBITS
I. Rent Roll
II. Management Agreement
III. Amended and Restated Operating Agreement
IV. Form of Tenant Estoppel Certificate
V. Legal Description
VI. Redevelopment Agreement
VII. Permitted Exceptions
VIII. Contracts Over $10,000 or not Terminable on 30 Days' Notice
IX. Notices of Violations
X. Brokerage Commission for Existing Leases
XI. Hook Up and/or Impact Fees
XII. Employees and Employment Matters
XIII. Tenant Defaults
XIV. Landlord's Funding Obligations Under Existing Leases
XV. Third Party Claims
XVI. Existing Articles of Organization and Operating Agreement
XVII. Pro Forma Balance Sheet
XVIII. Membership Certificate
XIX. Existing Tenant Improvements and Citadel Cash Escrow Agreement
XX. PGRLP Indemnification Agreement
XXI. ▇▇▇▇▇▇▇ Money Escrow Agreement
XXII. HELABA Loan Term Sheet
XXIII Earnout Guarantee
EXHIBIT I
Rent Roll
[INTENTIONALLY OMITTED]
EXHIBIT II
Management Agreement
[SEE ATTACHED]
MANAGEMENT AND LEASING AGREEMENT
THIS MANAGEMENT AND LEASING AGREEMENT (this "Agreement"), dated as of
this ___ day of , 2003, is made and entered into by and between DEARBORN CENTER,
L.L.C., a Delaware limited liability company ("Owner"), and PRIME GROUP REALTY
SERVICES, INC., a Maryland corporation ("Manager").
R E C I T A L S:
WHEREAS, Owner owns fee title in and to that certain property commonly
known as Bank One Center and located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
including all improvements located thereon, which property is legally described
on Schedule A attached hereto and made a part hereof (the "Property"); and
WHEREAS, Manager is experienced and qualified in the business of
managing, marketing, leasing and operating properties such as the Property; and
WHEREAS, Owner desires to engage and utilize the services and
experience of Manager in connection with the management, marketing, leasing and
operation of the Property; and
WHEREAS, Manager desires and is willing to render such services and
operate the Property, all upon the terms and subject to the conditions set forth
in this Agreement.
A G R E E M E N T S:
NOW, THEREFORE, in consideration of the foregoing Recitals (which
Recitals are, by this reference, incorporated into the text of this Agreement as
if fully set forth herein) and the mutual promises and covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. Responsibilities of Manager.. Responsibilities of Manager.
Responsibilities of Manager.. Responsibilities of Manager.
(a) Owner hereby engages and appoints Manager, on an exclusive basis,
to manage, market, lease and operate the Property, which shall include,
without limitation, the construction and installation (or the
administration and/or supervision thereof) of any tenant improvements
in, at or upon the Property, and Manager hereby accepts such engagement
and appointment and, subject to the conditions set forth in this
Agreement, agrees to manage, market, lease, supervise and operate, at
Owner's expense, the Property in accordance with the terms, provisions,
covenants and conditions set forth in this Agreement. During the Term
(as defined in Section 4 below) of this Agreement, and subject to the
limitations contained herein, Manager shall, subject to the provisions
hereof, the Annual Leasing Plan and the Annual Budget, have (1) full
authority to manage, market, lease and operate the Property as a
mixed-use office and retail building in accordance with the terms and
conditions hereof, (2) full and complete control and reign over, and
use of, the entire Property, including, without limitation, its common
areas, and (3) the right to determine operating policies, standards of
operation, quality of service and any other matters affecting tenant or
public relations with respect to the Property. Without limiting the
generality of the foregoing, Manager shall have full authority and
responsibility, at Owner's cost and expense, as follows:
(i) Operational Policies and Forms(i) Operational Policies and
Forms(i) Operational Policies and Forms(i) Operational
Policies and Forms. Subject to the applicable Annual Budgets
(as defined in Section 1(a)(xii) below) and subject to Owner's
reasonable supervision, Manager shall be permitted to
establish and implement such operational policies and
procedures, and develop such new policies and procedures, as
Manager may deem reasonably necessary to cause or to ensure
the establishment and maintenance of operational standards
appropriate for the nature of the Property.
(ii) Manager's Control. Subject to the terms and conditions of
this Agreement, Manager shall have day-to-day responsibility
for the operation of the Property. Manager shall, with the
prior approval of Owner (which shall not be unreasonably
withheld or delayed) determine, (a) rental rates and related
concessions, and (b) charges to tenants for other Property
services and for the use of the Property for all customary
purposes. Manager shall, with Owner's supervision, determine
(x) the terms of security at the Property, (y) policies
relating to credit, and (z) all phases of publicity and
promotion related to the Property. Notwithstanding the
foregoing, Manager shall not decrease the minimum rental rates
below, or increase the maximum tenant improvements allowance
and other concessions above, the amounts which are
specifically delineated therefor in the then adopted Annual
Leasing Plan (as defined in Section 1(a)(xii) below) without
first obtaining Owner's written consent thereto. Owner and
Manager agree that, upon request from the other party, each
promptly will deliver to the other, as the case may be, copies
of all leases and amendments and modifications thereto and
extensions, renewals and terminations thereof that may affect
the Property from time to time.
(iii) Information; Advertising(iii) Information(iii)
Information(iii) Information. Subject to Owner's supervision,
(a) Manager shall be permitted to develop any informational
material, mass media releases and other related publicity
materials that Manager deems necessary for the management,
marketing, leasing and operation of the Property, and (b) to
the extent approved in the Annual Budgets, Manager shall be
permitted to advertise and promote the business of the
Property at such times and in such manner as Manager deems
appropriate.
(iv) Regulatory Compliance(iv) Regulatory Compliance(iv)
Regulatory Compliance(iv) Regulatory Compliance. Manager shall
use commercially reasonable efforts (a) to maintain and keep
in full force and effect all licenses, permits, qualifications
and approvals from any applicable governmental or regulatory
authority with jurisdiction over the Property required for the
management, marketing, leasing and operation of the Property,
(b) to manage, market, lease and operate the Property in
material compliance with all laws, statutes, codes,
ordinances, rules and regulations of governmental authorities
having jurisdiction over the Property (collectively, "Legal
Requirements"), and (c) to comply with all Legal Requirements
in performing Manager's obligations under this Agreement. In
addition, Manager shall supervise and coordinate the
preparation and filing of (and, where required to do so under
the Legal Requirements, file) all reports or other information
required by all state or other governmental agencies having
jurisdiction over the Property, and shall deliver copies of
all such reports and information to Owner upon request. Upon
the expiration or other termination of this Agreement, any and
all licenses, permits and approvals which Manager has obtained
and which relate to the Property or to the use or operation
thereof or the construction or installation of improvements
thereon (all of which shall be in Owner's name except if
otherwise required by applicable Legal Requirements), shall be
delivered to Owner or Owner's designee. Further, Manager
understands and agrees that, in connection with any financing
Owner obtains for the Property, the Lender (as defined in
Section 1(a)(vii)) of such financing may require that
Manager's or Owner's interest, as the case may be, in any and
all such licenses, permits, qualifications and approvals be
assigned to such lender for collateral purposes. Manager
hereby agrees to execute and deliver any such collateral
assignment and other documents which are reasonably required
by any such lender and acceptable to Manager promptly upon
request therefor by Owner. In the event any alterations,
additions or improvements, structural or non-structural, shall
be required to be made to the Property to comply with any
Legal Requirements, such alterations, additions and
improvements shall be the responsibility of and shall be
performed at the sole expense of Owner but as part of
Manager's duties hereunder Manager will supervise same on
behalf of Owner. Manager shall defend, if requested by Owner,
any actions, suits or other proceedings alleging
non-compliance with any Legal Requirements. Manager shall
contest, if requested by Owner, by appropriate legal
proceedings conducted in good faith, in the name of Manager or
Owner, or both, the validity or application of any Legal
Requirements. If Owner shall approve any such contest, Owner
shall execute and deliver any appropriate documents which may
be necessary or proper to permit Manager to prosecute such
contest.
(v) Equipment and Improvements(v) Equipment and
Improvements(v) Equipment and Improvements(v) Equipment and
Improvements. Subject to the applicable Annual Budget, Manager
shall, on behalf of Owner, acquire and install or effect the
acquisition and installation of equipment and improvements
which are needed (a) to maintain or upgrade the quality of the
Property or its services, (b) to replace obsolete or run-down
equipment, or (c) to correct any other deficiencies which may
be identified by Manager during the Term of this Agreement. In
connection therewith, Manager shall make, or engage third
parties to make, all such repairs, replacements and
maintenance and shall cause to be acquired all necessary
equipment, including replacement equipment.
(vi) Accounting(vi) Accounting(vi) Accounting(vi) Accounting.
Manager shall supervise and coordinate accounting support to,
and prepare and maintain books, records and reports for, the
Property and the Owner, including the following:
A. a monthly balance sheet and statement of
operations for Owner;
B. tenant billing records;
C. accounts receivable and collection records;
D. accounts payable records;
E. all payroll functions, including preparation of
payroll checks, establishment of depository accounts
for withholding taxes, payment of such withholding
taxes (at Owner's sole expense), filing of payroll
reports and the issuance of W-2 forms to all
employees, if any;
F. a complete general ledger for the purposes of
recording and summarizing all transactions for the
Property;
G. the preparation and filing of all necessary
reports as required by any and all governmental
authorities having jurisdiction over the Property or
the operation thereof. Manager shall file, on its own
behalf or on behalf of Owner, all such reports as are
required to be filed by Manager or Owner;
H. monthly occupancy and tenant delinquency reports;
and
I. regular leasing reports for the Property setting
forth the common area charges, taxes and insurance
incurred or payable (or expected to be incurred or
payable) with respect to the operation of the
Property and each tenant's proportionate share
thereof.
In connection with the performance of its duties
under this Section 1(a)(vi), Manager will develop accounting
procedures and systems to facilitate the preparation of the
books, records and reports (the "Accounting Procedures"). All
Accounting Procedures developed by Manager shall comply with
generally accepted accounting principles ("GAAP") and will not
materially distort income or loss from the operation of the
Property. Any modifications to the Accounting Procedures will
be subject to Owner's approval, which will not be unreasonably
withheld or delayed. Subject to the applicable Annual Budgets,
nothing herein shall preclude Manager at Owner's cost from
engaging a third party to assist it in the performance of the
accounting duties provided for herein including, without
limitation, Owner's independent accounting firm (the "Company
Accountant"); provided that the cost of the accounting duties
described in Section 1(a)(vi)(A)-(I), inclusive, will be borne
by Manager and not by Owner. Manager shall maintain such books
and records either at the Property or Manager's principal
place of business in Chicago, Illinois. Owner, or any agents
or employees of Owner or the Company Accountant shall have the
right from time to time, during normal business hours and upon
reasonable prior notice to Manager, to examine such books and
records at the offices of Manager.
(vii) Operating and Tax Reports(vii) Reports(vii) Reports(vii)
Reports. In addition to the reports to be prepared by Manager
pursuant to Section 1(a)(vi) of this Agreement, Manager will
supervise and coordinate the preparation of the following
operating and tax information for the Property and Owner, all
of which will be prepared (to the extent applicable) in
accordance with GAAP:
A. Within twenty (20) days after the end of each
calendar month, (1) an unaudited balance sheet for
Owner, dated as of the last day of such month, and
unaudited statements of income and expenses (with
budget variance explanation) and cash flow for such
month relating to the operation of the Property
(collectively, the "Monthly Statements"), (2) a
leasing report detailing letters of intent and leases
entered into in the previous calendar month and
information regarding any lease renewals,
modifications, extensions and terminations (if any)
during the previous calendar month; (3) a capital
expenditures report detailing the nature and amount
of capital expenditures made in the previous calendar
month; and (4) bank account reconciliations and
copies of bank statements.
B. Within thirty (30) days after the end of each
calendar quarter (other than the last calendar
quarter of each year), (1) an unaudited balance sheet
for Owner, dated as of the last day of such calendar
quarter, and unaudited statements of income and
expense (with budget variance explanation) and cash
flow for such quarter relating to the operation of
the Property, (2) a report containing information
regarding changes in the capital accounts of Owner's
members (the "Statement of Capital Accounts"), which
shall include the amount of capital contributions
credited to each member's capital account during such
period, any distribution received by any member
during such period, and any items of profit or loss
from Owner's activities and the operation of the
Property during such period, and (3) a quarterly
marketing report relating to the leasing activity at
the Property.
C. Within ninety (90) days after the end of each
calendar year (1) a final unaudited balance sheet for
Owner, dated as of December 31 of each calendar year
during the Term, and unaudited statements of income
and expenses (with budget variance explanation) and
cash flow for such calendar year, in sufficient
detail to enable the Company Accountant to audit the
financial statements for Owner and the Property, and
(2) a Statement of Capital Accounts for such calendar
year.
D. At such time or times as may be required by the
loan documents for Owner's mortgage loan encumbering
the Property (the "Loan Documents"), Manager will
prepare and submit to Owner and the relevant lenders
(individually and collectively, the "Lender") such
financial reports as may be required by the Loan
Documents. Manager will familiarize itself with the
provisions contained in Owner's Loan Documents and
shall, to the extent funds are made available to
Manager hereunder for such purpose, use commercially
reasonable efforts to keep Owner and the Property in
compliance with all material provisions thereof;
provided, however, that the foregoing requirement
does not include any obligation to make payments of
debt service under any Loan Documents or any other
amount payable to the Lender pursuant to Owner's Loan
Documents. Manager acknowledges that the Loan
Documents provide for a holdback of $22,500,000 to be
used to pay costs incurred by the Owner for tenant
improvements and leasing commissions (the "Holdback
Amount"), and that, subject to the requirements of
the Lender, such funds are intended by Owner to be
utilized to pay for such costs prior to any
utilization of the Operating Account (defined below)
or other funds of Owner for such costs. Therefore,
any delay in receiving these funds in connection with
the draw process set forth in the Loan Documents
shall not be a default by Owner under this Agreement
or Schedule B attached.
E. Manager also shall prepare and submit to Owner and
its members, such monthly, quarterly and annual
returns and reports for Owner and the Property
containing such information as may be reasonably
necessary for Owner and its members to prepare and
file on a timely basis any monthly, quarterly and/or
annual returns or reports required to be filed by
Owner or any of its members with the Securities and
Exchange Commission, the Internal Revenue Service or
other governmental bodies and such other reports and
information as Owner or Prime Group Realty, L.P.
("PGRLP") reasonably requests including, without
limitation, such information as PGRLP reasonably
requests with respect to reporting and other
requirements applicable to real estate investment
trusts generally and Prime Group Realty Trust, in
particular.
Owner will provide Manager with such information as Manager
reasonably requests to enable Manager to timely prepare all
reports required to be prepared by Manager including, without
limitation, the Loan Documents and information relating to the
distribution and other transactions affecting the members'
capital accounts. Manager shall not be considered to be in
default of any of its obligations under this Section 1(a)(vii)
if Manager is unable to complete and deliver any reports
required hereunder because Owner or PGRLP fails to promptly
deliver any information reasonably requested by Manager. Owner
and Manager hereby acknowledge and agree that Manager shall be
responsible for the preparation and maintenance of all books
and records of the Property and Owner including, without
limitation, the accounting and tax records for Owner and the
Property and that Manager shall be responsible for the
preparation of all Federal, state and local income tax returns
and reports for Owner and the Property. In this regard, Owner
agrees to promptly deliver to Manager all bank statements
received by Owner for the Company Account, the Operating
Account and any other bank or similar account maintained by
Owner with respect to the Property and to promptly notify
Manager of any and all transactions, withdrawals, payments,
receipts, wire transfers and other activity in any such
accounts to enable Manager to maintain and prepare all of the
accounting, income tax and other books and records for Owner
and the Property. Owner agrees to pay Manager (in addition to
the Management Fees (defined below) and to any costs
attributable to the Company Accountant) an amount equal to ten
cents ($.10) per rentable square foot of the Property each
year to cover the costs and expenses incurred by Manager in
preparing, supervising and coordinating the books, records,
reports, accounting, tax and other materials under this
Section 1(a)(vii) including, without limitation the allocated
share of the wages, salaries and benefits of Manager's or any
of its Affiliates' and its Affiliates and their respective
employees that prepare any of the foregoing. Such amount may
be increased from time to time as mutually agreed by Owner and
Manager in their reasonable discretion to reflect actual
increases in such costs and expenses.
(viii) Bank Accounts(viii) Bank Accounts(viii) Bank
Accounts(viii) Bank Accounts. All rents and other sums
received from tenants and other third parties relating to the
Property shall be deposited in an account at SunTrust Bank or
another bank designated by Owner (the "Company Account").
Owner also shall establish a segregated account or accounts
for and in the name of Owner at such bank as is agreed upon by
Owner and Manager from time to time (the "Operating Account").
If Owner and Manager decide to change such bank, Manager shall
promptly transfer all funds remaining in the previously
established Operating Account to the new bank account. Manager
shall deposit into the Company Account all money received by
Manager on Owner's behalf from the management, marketing,
leasing and operation of the Property. After payment of all
amounts due under the Loan Documents, Owner shall make
regular, monthly (or more often, if necessary) deposits into
the Operating Account (to the extent sufficient funds are
available in the Company Account and any other accounts Owner
maintains for the Property) to pay all expenses and capital
items (including, but not limited to, improvements, tenant
improvements, leasing commissions and leasing costs) of the
Property and other amounts to be paid by or to Manager
pursuant to this Agreement including, without limitation, all
amounts contemplated by the Annual Budgets. Notwithstanding
the foregoing, payment for leasing commissions and tenant
improvements will be made from the Holdback Amount and will be
due only from those funds until the Holdback Amount is
exhausted and will be disbursed as provided in the relevant
Loan Documents. Withdrawals and payments from the Operating
Account shall be made only on checks signed (personally or by
facsimile signature) by one or more person or persons
designated by Manager. Manager shall give Owner written notice
as to the identity of such authorized signatories on such
account. Notwithstanding the foregoing, a single
representative of Owner shall also have signatory authority on
the Operating Account provided such signatory authority by
Owner shall not be exercised without Owner having first
provided Manager with at least two (2) business days' prior
written notice of such exercise. In no event shall the
exercise by Owner of such signatory authority cause the
Operating Account to become overdrawn or otherwise be
exercised in any manner which would interfere with Manager's
rights and obligations under this Agreement. Subject to
Section 1(a)(xii)(b) below, any and all expenditures and
expenses (ordinary, extraordinary, capital, foreseen and/or
unforeseen) incurred in the management, marketing, leasing and
operation of the Property (other than those relating to the
payment of interest, principal, and other amounts due under
the Loan Documents), including, but not limited to, payroll
and employee benefits, real estate taxes, repair and
maintenance expenses, Leasing Fees payable to Outside Brokers
(as defined in Schedule B attached hereto), reserves
established pursuant to the applicable Annual Budgets, capital
items (including, but not limited to, improvements, tenant
improvements, leasing commissions and leasing costs) and other
operating expenses of the Property, shall be paid by check
drawn on the Operating Account and, accordingly, Owner hereby
authorizes Manager to pay such expenditures and expenses as
and when the same shall become due and payable and in all
events prior to delinquency, subject to the availability of
sufficient funds in the Operating Account. Management Fees and
Leasing Fees (as such terms are defined in Section 8 below),
other than those due to any Outside Broker, will be paid by
Owner to Manager from the Company Account on a pari passu
basis with the monthly UST Administrative Fee (as defined in
Operating Agreement) payable to UST XI Dearborn, Ltd. ("UST").
Any Management Fees, Leasing Fees and other amounts due and
payable pursuant to this Agreement which are not paid when due
as a result of Owner's failure to deposit funds in the
Operating Account or any default by Owner under Section 5 of
this Agreement shall (a) accrue, (b) be due and payable
promptly by Owner directly to Manager, and (c) if not paid
within five (5) days after due, shall accrue interest at the
Default Rate (as defined in Section 23 below) until paid. If
any Management Fees, Leasing Fees or other amounts payable
hereunder are not paid when due because of an insufficiency of
funds in the Company Account or other accounts maintained by
Owner with respect to the Property (and such insufficiency is
not due to distributions made by Owner to any of its members)
or because the Lender has not yet funded such amounts from the
Holdback Amount pursuant to the Loan Documents, then such
amounts shall accrue and shall be paid promptly after
sufficient funds are available in the Company Account or are
funded from the Holdback Amount, as applicable, but shall not
accrue interest. Owner agrees that during the Term of this
Agreement and subject to the availability of funds in the
Company Account, a minimum balance of $500,000.00 or such
other amount as agreed upon in writing by Owner and Manager,
shall be maintained in the Operating Account. If for any
reason, the amount of funds in the Operating Account falls
below the aforesaid minimum balance threshold or because of a
draft to be written upon Operating Account the balance thereof
will fall below such minimum balance threshold, Manager shall
promptly notify Owner. Thereafter, subject to the availability
of funds in the Company Account, Owner shall immediately cause
funds to be deposited into the Operating Account in an amount
sufficient to restore the balance thereof to a level equal to
or greater than the aforementioned minimum balance threshold.
After payment of all amounts pursuant to this subsection
(viii), and subject to the foregoing minimum balance
threshold, any excess funds remaining in the Operating Account
as of the end of a calendar month shall be, if applicable,
deducted from the amounts required to be transferred by Owner
into the Operating Account for the following month. Copies of
all cancelled checks and deposit slips shall be maintained at
the offices of the Manager in Chicago, Illinois.
(ix) Personnel(ix) Personnel(ix) Personnel(ix) Personnel.
Manager shall have full power and authority to recruit, hire,
train, promote, direct, discipline and fire all personnel
performing services relating to the Property; establish salary
levels, personnel policies and employee benefits; and
establish employee performance standards, all as Manager
determines, in its sole discretion, to be necessary or
desirable during the Term of this Agreement to ensure the
efficient and satisfactory operation of all departments
within, and all services offered by, the Property. All of the
foregoing obligations shall be undertaken in accordance with
the Annual Budgets and all Legal Requirements. All of the
personnel shall be the employees of Manager, unless otherwise
agreed by Owner and Manager, and all salary, bonuses, fringe
benefits, payroll taxes and related expenses payable to or in
respect of the personnel shall be expenses of the Property.
Owner shall reimburse Manager for all reasonable travel
expenses incurred in good faith by any of Manager's employees
relative to hiring and training of Property employees,
maintaining the physical condition and appearance of the
Property, maintaining and promoting proper operational
procedures and practices, maintaining books and records and
otherwise performing duties undertaken by or rights granted to
Manager in this Agreement. Notwithstanding the foregoing,
Manager shall not be reimbursed under this Agreement for the
following expenses: cost of salary, wages, commissions or
other remuneration, and related benefits for any officer,
director, partner, principal or executive of Manager, except
that Manager will be (i) reimbursed the salary and other
benefits of the employees of Manager working solely at the
Property, including, but not limited to, the full-time
building manager ("Building Manager"), as an operating expense
of the Property and (ii) the costs incurred by Manager to pay
salary and benefits or compensation to Manager's employees as
provided in Section 1(a)(vii) above.
(x) Supplies, Materials and Equipment(x) Supplies and
Equipment(x) Supplies and Equipment(x) Supplies and Equipment.
Manager shall be permitted to purchase all supplies, materials
and non-capital equipment as Manager deems reasonably
necessary to manage, market, lease and operate the Property
within the budgetary limits set forth in the Annual Budgets.
(xi) Legal Proceedings(xi) Legal Proceedings(xi) Legal
Proceedings(xi) Legal Proceedings. Manager shall have the
right, through legal counsel designated by Manager, to direct
all legal matters and proceedings that are within the scope of
Manager's authority pursuant to this Agreement, including
without limitation, (a) defending any claims instituted by
third parties relating to the Property, and (b) instituting
any necessary legal actions or proceedings to collect
obligations owing to Manager, Owner and/or the Property,
canceling or terminating any lease, contract or agreement
relating to the Property for breach thereof or default
thereunder, and otherwise enforcing the obligations of the
tenants, sponsors, licensees, customers and any other
occupants and users of the Property. Notwithstanding the
foregoing, Manager will not commence any litigation or
terminate or cancel any lease, contract or agreement on behalf
of Owner and in performance of its obligations and duties
under this Agreement without Owner's consent, which will not
be unreasonably withheld or delayed. Without limiting the
generality of the foregoing, Manager is authorized to settle,
in the name and on behalf of Owner and on such terms and
conditions as Manager may deem to be in the best interests of
the Property, any and all claims or demands arising out of, or
in connection with, the management, marketing, leasing and
operation of the Property, whether or not legal action has
been instituted, provided that any such settlement resulting
in the expenditure of funds from the Operating Account does
not exceed the amount for each such individual claim or demand
as set forth in the most recently approved Annual Budgets; and
provided further that Manager shall be required to obtain
Owner's consent (which will not be unreasonably withheld or
delayed) to settle any matter for which the amount in
controversy exceeds $25,000.00, unless a greater amount was
previously approved in the applicable Annual Budget. All such
amounts paid in respect of any such settlements shall be
expenses of the Property. Manager will give prompt notice to
Owner of all demands and claims and all settlements and legal
actions.
(xii) Annual Budgets.
(a) Preparation and Submission. Attached hereto as
Schedule C are the Annual Budgets for the remainder
of calendar year 2003 and calendar year 2004, which
Annual Budgets are hereby approved by Manager and
Owner. The Annual Budgets shall be comprised of three
(3) components consisting of the following: (i) the
Annual Leasing Plan, which identifies the prospective
lease terms for the coming year and projects the
revenues available and funds required during such
calendar year in order to lease and market the
Property and includes lease guidelines pursuant to
which Manager will have authority to lease the
Property, (ii) the Annual Capital Plan, which
projects the revenues available and funds required
during such calendar year to make the capital
improvements necessary or desirable in order to keep
the Property in good condition and repair, and (iii)
the Annual Operating Budget, which projects the
revenues available and funds required during such
calendar year in order to manage, maintain and
operate the Property and keep the Property in
compliance with the terms and conditions of this
Agreement. Any references herein to the Annual
Budgets shall be deemed to collectively refer to the
Annual Leasing Plan, the Annual Capital Plan and the
Annual Operating Budget and any reference to an
Annual Budget shall mean the Annual Leasing Plan, the
Annual Capital Plan or the Annual Operating Budget,
as applicable. Except for the Annual Budgets for the
remainder of the 2003 calendar year and the 2004
calendar year, at least forty-five (45) days prior to
the end of each calendar year during the Term of this
Agreement, Manager shall submit to Owner a proposed
Annual Leasing Plan, Annual Capital Plan and Annual
Operating Budget for the following calendar year (the
"Proposed Annual Budgets"). The Proposed Annual
Budgets shall be based upon data and information then
available to Manager and shall include, without
limitation, estimated salaries and fringe benefits
for all personnel groups, projected staffing patterns
for the Property, estimates of required capital
expenditures and purchases of equipment, supplies,
materials, inventory, food and similar items, and an
estimate of the level of rates and charges to tenants
of the Property sufficient to generate revenue
necessary to manage, market, lease and operate the
Property and make the capital improvements projected
in the applicable Proposed Annual Budget. The
Proposed Annual Budgets shall include an estimate of
revenues, costs, expenses and expenditures, and Owner
and Manager acknowledge and agree that (1) projected
revenue may not be actually received and (2)
projected costs, expenses and expenditures may be
exceeded by actual costs, expenses and expenditures
incurred in connection with the management,
marketing, leasing, repair and operation and
maintenance of the Property. By submitting the
Proposed Annual Budgets, Manager shall not be deemed
to be providing a guarantee or warranty as to the
projected revenue, costs, expenses or expenditures
of, or as to any other financial matter relating to,
the Property, except that Manager does represent and
warrant that Manager will prepare the proposed Annual
Budgets in good faith and based on commercially
reasonable assumptions.
(b) Adoption. The Annual Budgets, as finally adopted
in accordance with this subsection (b) (including as
it may thereafter be revised from time to time during
any calendar year pursuant to the written agreement
of Owner and Manager) shall constitute the "Annual
Budgets" for all purposes of this Agreement. Owner
shall, within thirty (30) days following receipt from
Manager of the Proposed Annual Budgets, notify
Manager of either (1) Owner's approval of the
Proposed Annual Budgets (or individually, the
proposed Annual Leasing Plan, Annual Capital Plan, or
Annual Operating Budget) or (2) those items of each
such budget or plan that Owner approves and those
items of each such budget or plan that Owner
disapproves. If Owner shall approve the Proposed
Annual Budgets (or any of them), the same
automatically shall be adopted as the applicable
Annual Budget for the applicable calendar year. In
the event that Owner does not notify Manager in
writing of Owner's approval or disapproval, in total
or in part, of the Proposed Annual Budgets within
such thirty (30) day period, then all of the Proposed
Annual Budgets shall be deemed approved by Owner and
automatically shall be adopted as the Annual Budgets
for the applicable calendar year. If Owner
disapproves of the Proposed Annual Budgets either in
total or in part within such thirty (30) day period
as aforesaid, then Owner and Manager shall have an
additional fifteen (15) days from the date of
Manager's receipt of Owner's disapproval notice to
formulate and adopt the mutually agreeable Annual
Budgets. If the parties are unable to reach an
agreement on any line-item in the Proposed Annual
Budgets within said additional fifteen (15) day
period, then the applicable line-items which are the
subject of such dispute in the Annual Budgets for the
calendar year immediately preceding the calendar year
for which Owner and Manager are unable to agree
(i.e., the calendar year in which the approval
process for such budget was to occur), including any
such prior Annual Budgets determined in accordance
with this sentence, shall be increased by the
percentage increase in the Consumer Price Index --
Urban Wage Earners (or, if such index is no longer
published, such other index as is determined by
Manager in good faith to be comparable) during the
12-month period ending on November 30th of such
preceding year, and such increase shall constitute
the relevant line-items in the Annual Budgets pending
the final adoption of the Annual Budgets; provided,
however, that the budgeted items for the categories
of heat, light, power, insurance, real estate taxes
and other operating items necessary for the
day-to-day operation of the Property shall be deemed
increased as required to reflect actual expenses for
the succeeding calendar year. The terms of the
immediately preceding sentence shall apply separately
to each line-item of the Proposed Annual Budgets
(e.g., should Manager and Owner agree on all
line-items in the proposed Annual Leasing Plan and
not in the Annual Capital Plan or the Annual
Operating Budget, the agreed-upon proposed Annual
Leasing Plan and agreed upon line items in the Annual
Capital Plan and Annual Operating Budget shall be
adopted for the applicable calendar year while the
disputed line items in the Annual Capital Plan and
the Annual Operating Budget shall be determined in
accordance with this Section 1(a)(xii)(b)).
(c) Efforts to Operate within Annual Budgets. Manager
agrees to use commercially reasonable efforts to
manage, market, lease and operate the Property in
accordance with the Annual Budgets. Subject to the
foregoing limitation, Owner shall be responsible, as
and when needed, for the payment of any and all
costs, expenses and expenditures incurred in
connection with the management, marketing, leasing,
operation, repair and maintenance of the Property,
including, without limitation, Management Fees,
Leasing Fees and cost overruns, which exceed the
projections in the then current Annual Budgets and
including the cost of all litigation and other
proceedings relating to the Property and compliance
with Legal Requirements. In no such event, without
Owner's prior written approval, shall Manager make
expenditures in excess of any line item in the then
applicable Annual Operating Budget to the extent such
increased expenditures (i) exceed the amount of the
applicable line item by more than five percent (5%)
of such line item for any calendar year; or (ii)
exceed the total aggregate amount of all line items
by more than one percent (1%) for any calendar year.
Notwithstanding anything in this Agreement to the
contrary, if Manager determines in good faith that
the incurrence of any cost, expense or expenditure is
required in order to comply with any Legal
Requirements or is required or desirable in the event
of an emergency or other occurrence where prompt
action is necessary, then, without Owner's prior
approval, Manager shall be entitled to incur such
costs and expenses and make such expenditures, all of
which shall be deemed, for all purposes of this
Agreement, to be in accordance with the then current
Annual Operating Budget.
(xiii) Collection of Accounts. Manager shall issue bills for,
and use commercially reasonable efforts to collect, all rents,
receipts, income and security deposits and all other sums of
money whatsoever which may be or become due and payable to
Owner in connection with the occupancy, use or enjoyment of
the Property or that may be owed for goods and services
furnished by the Property, Owner or Manager, including, but
not limited to, enforcing the rights of Owner and the Property
as creditor under any contract or in connection with the
rendering of any services. Owner hereby authorizes Manager to
request, demand, collect, receive and receipt for any and all
such rents, receipts, income, security deposits and other sums
of money and to recommend to Owner the institution of legal
proceedings for the collection thereof and for the
dispossession of tenants and other persons from the Property.
Any actions taken by Manager to collect said accounts
receivable shall be in accordance with any Legal Requirements
governing the collection of accounts receivable and in
accordance with the applicable Annual Budget.
(xiv) Maintenance and Repairs. To the extent of the
expenditures set forth in the then approved Annual Budgets for
maintenance and repairs, Manager shall cause to be made all
repairs, corrections and maintenance as shall be required in
the normal and ordinary course of operation of the Property in
order to maintain the Property in good order and in a safe
condition and in compliance with all Legal Requirements
including, without limitation, keeping the sidewalks, parking
areas, and common areas forming a part of the Property or
serving the Property free of debris and from ice and snow. Any
repairs, corrections or maintenance in excess of the
expenditures approved therefor in the then adopted Annual
Budgets shall be caused to be made only upon the prior written
approval (not to be unreasonably withheld or delayed) of Owner
and in any case where written approval is required, once such
written approval has been obtained, Manager is authorized to
take all actions and to make and enter into all such contracts
and purchase orders as Manager deems necessary or desirable.
Notwithstanding the foregoing or anything to contrary
contained herein, in the event a condition should exist, or an
event or circumstance should occur, in or about the Property
of an emergency or other nature which immediately requires
that repairs be made or actions to be taken to preserve and
protect the Property or assure its continued operation, or to
protect the tenants, employees and/or invitees in the Property
or Manager, or is otherwise related to or concerning the
safety of the Property or any person, Manager is hereby
authorized to take all actions, enter into all contracts and
purchase orders and to make all expenditures as Manager deems
reasonably necessary or desirable to repair and correct any
such condition and/or cure and respond to such event or
circumstance; provided, however, that Manager shall, to the
extent practicable, endeavor to first contact and inform Owner
of the necessity, nature and estimated costs of such emergency
repairs or expenditures.
(xv) Contracts. Manager shall negotiate, enter into, secure,
amend, modify, alter, extend, renew, cancel and/or terminate
such agreements and contracts which Manager may deem necessary
or advisable for the management, marketing, leasing and
operation of the Property, including, without limitation, the
leasing of space, the furnishing of concessions, supplies,
utilities, extermination, refuse removal, the retention of
real estate tax and insurance consultants (which shall be
subject to Owner's approval, not to be unreasonably withheld
or delayed) and other services. Where lawful, said agreements
and contracts will be entered into by Manager in the name of
and on behalf of Owner. At the request of Owner and/or when
determined desirable by Manager, Manager shall contract with a
tax service to make a review of and submit a report with
respect to all real estate and personal property taxes and
assessments affecting the Property and shall file all personal
property tax returns after consulting with Owner concerning
the contents thereof.
(xvi) Tenant Relations. Manager shall use good faith efforts
to maintain businesslike relations with all tenants of the
Property and shall receive, consider and record all service
requests from such tenants in a systematic fashion and shall
take commercially reasonable actions in response to each such
request. Serious complaints from tenants of the Property,
after investigation, shall be duly reported to Owner with
recommendations as to the manner in which or course of action
to take with respect thereto. Manager agrees that, except for
services of the types delineated on Schedule D attached
hereto, neither Manager nor its Affiliates or any of their
respective employees shall perform any services directly for
any tenant of the Property (as opposed to those performed for
Owner and the Property pursuant to this Agreement) without the
consent of Owner, which will not be unreasonably withheld or
delayed.
(xvii) Leasing. Manager shall devote its commercially
reasonable efforts and time to the negotiation of leases and
lease amendments, extensions and renewals for any space within
the Property that is now or hereafter becomes vacant during
the term (as may be extended as provided herein) of this
Agreement. Manager shall be the exclusive leasing broker of
Owner for the purpose of leasing the Property or any portion
thereof; provided, however, that Manager may engage sub-agents
to perform its obligations under this Section 1(a)(xvii)
including, without limitation, with respect to the leasing of
the retail portion of the Property, Mid-America Real Estate
Corporation. Owner shall have the right, in its reasonable
discretion, to approve the terms, provisions, covenants,
conditions and forms of any proposed lease or lease amendment,
modification, extension, renewal, termination or cancellation,
and to approve any prospective tenants of the Property. In the
event that Owner fails to disapprove any proposed lease, or
lease amendment, modification, extension, renewal, termination
or cancellation, or any other agreement related to the use and
occupancy of the Property or any portion thereof, within ten
(10) days after Manager delivers to Owner the proposed final
draft thereof, then Owner shall be deemed to have granted its
consent thereto and approval thereof. Manager shall use
commercially reasonable efforts to comply in all material
respects with any leasing requirements of any Lender contained
in any Loan Document of which a copy has been delivered either
to Manager or to PGRLP In the event that Owner enters into
negotiations directly with any tenant at or prospective tenant
of the Property, such negotiations shall neither affect the
amount of any leasing commission or fee that would otherwise
be due and payable to Manager with respect to such lease,
amendment, modification, alteration, extension, renewal,
termination or cancellation, nor affect the terms and
conditions of this Agreement regarding whether and when a
leasing commission and/or fee is deemed earned (it being the
understanding and agreement of Manager and Owner that Manager
shall be entitled to be paid a Leasing Fee as provided in
Section 8 below and Schedule B attached hereto with respect to
any and all leases, lease amendments, lease modifications,
lease extensions or renewals, licenses and other agreements
related to the use and occupancy of the Property or any
portion thereof by any party, regardless of whether or not
Manager procured such party or was involved in negotiations).
In the event any Outside Broker is involved by Manager in
obtaining any new tenant of the Property on behalf of or in
conjunction with Manager and a commission is due hereunder,
Manager shall have the discretion to negotiate the fee payable
to such outside broker, and any such commission shall be paid
in accordance with the terms and provisions of Section 8 below
and Schedule B attached hereto.
(b) Exclusive Representative. It is understood and agreed that Manager
shall be the sole and exclusive representative of Owner for purposes of
communicating and dealing directly with the regulatory authorities,
governmental agencies, employees, independent contractors, suppliers,
tenants, sponsors, licensees, customers and guests of the Property. Any
communications from Owner to such persons or entities or authorities
shall be directed through Manager unless Owner and Manager mutually
agree that direct communications between Owner and one or more such
persons or entities is appropriate. In this regard, Owner hereby
appoints Manager as its agent and authorized representative to
negotiate, enter into, secure, amend, modify, alter, extend, renew,
cancel and/or terminate any contracts and agreements contemplated by
this Agreement including, without limitation, the contracts and
agreements described in Section 1(a)(xii) and (xv) and all existing and
future leases, licenses and other occupancy agreements, and all
amendments, extensions, renewals, terminations and cancellations of any
of the foregoing as contemplated by Section 1(a)(xii) and (xvii) hereof
(collectively, the "Contracts and Leases"), subject to the terms and
conditions of this Agreement. Notwithstanding the foregoing, Manager
acknowledges and agrees that Owner has the right to participate in any
communication or dealing with regulatory authorities and governmental
agencies and that Manager has no right to terminate or cancel leases
without Owner's consent, which will not be unreasonably withheld or
delayed.
(c) Right to Replace Leasing Agent. Manager and Owner agree that in the
event that the office portion of the Property is not Eighty Percent
Leased (as defined below) by the Office Leasing Deadline (as defined
below), then at any time after the Office Leasing Deadline until the
date the office portion of the Property is Eighty Percent Leased, Owner
shall have the right, upon thirty (30) days advance written notice to
Manager, to replace Manager as the leasing agent for the Property, but
not as the manager of the Property. In the event that the Manager is
replaced as the leasing agent for the Property pursuant to this Section
1(c), Manager shall continue to have the right to receive Leasing Fees
as contemplated by this Agreement for the 180-day period after such
replacement. No replacement of Manager as leasing agent pursuant to
this Section 1(c) shall affect Manager's right to receive Management
Fees or any other amounts due under this Agreement except Leasing Fees.
The term "Eighty Percent Leased" shall mean that eighty percent (80%)
of the office portion of the Property as of the date of this Agreement
consisting of a total of 1,402,234 square feet (and not including the
24,223 square feet of storage space and 95,349 square feet of retail
space) is leased to tenants pursuant to signed leases, without the
necessity of such tenants having yet occupied the space or commenced
paying rent. The term "Office Leasing Deadline" shall mean the date
that is the second annual anniversary of the date of this Agreement;
provided that if on such date the Manager is negotiating the actual
form of a lease or leases with one or more tenants pursuant to business
terms consistent with leasing guidelines previously approved by Owner
or otherwise reasonably acceptable to Owner, and the execution of such
lease or leases would cause the office portion of the Property to be
Eighty Percent Leased, then the Office Leasing Deadline shall be
extended for such period of time, not to exceed an additional sixty
(60) days, that such negotiations are ongoing until such lease or
leases are signed or such negotiations cease on leases sufficient to
cause the office portion of the Property to be Eighty Percent Leased.
In addition, it shall not be a default by Owner under this Agreement if
the Lender requires Owner to replace Manager as the leasing agent for
the Property to the extent expressly provided in the applicable Loan
Documents.
2. Insurance. Manager, at Owner's request, cost and expense, shall
arrange for and shall maintain and keep in full force and effect insurance
coverage with respect to the Property as agent of and on Owner's behalf,
including, without limitation, (a) comprehensive general liability insurance,
fire and extended coverage insurance, workers' compensation insurance, business
interruption insurance and any other insurance customarily and usually procured
in the operation of a Class A mixed-use office and retail building located in
Chicago, Illinois and similar to the Property, or required by any Lender
(provided that Owner delivers to Manager a copy of any such Lender's insurance
requirements) and (b) the following types of insurance with respect to Manager
and its employees performing duties under this Agreement: (i) comprehensive
general liability insurance, including a broad form endorsement, hired and
non-owned automobile insurance and workers' compensation insurance, covering
Manager's employees performing duties under this Agreement; (ii) professional
liability errors and omissions coverage for the management of the Property with
minimum limit of $1,000,000 (or such higher amount as Owner may reasonably
request) per claim (such coverage may be an endorsement of the general liability
insurance policy); and (iii) crime coverage including employee dishonesty,
forgery, theft of money and securities, with minimum limit of $2,000,000 (or
such higher amount as Owner may reasonably request) per occurrence and in the
aggregate. All such insurance shall be in reasonable amounts and effected by
policies issued by insurance companies of good reputation and sound financial
responsibility in Manager's reasonable discretion. Upon Owner's request,
certificates of insurance evidencing such insurance shall be promptly delivered
to Owner. All comprehensive general liability and hired and non-owned automobile
insurance policies procured by Manager under this Section 2 shall name Owner and
any Lender of the Property of whom Owner has informed Manager in writing as
additional insureds. All such policies of insurance shall also be endorsed
specifically to the effect that such policies shall not be cancelled or
materially changed without at least thirty (30) days' prior written notice to
Owner, Manager and any Lender with respect to the Property, if required by the
terms of such Lender's mortgage. The parties acknowledge that the insurance
required to be maintained by Manager on behalf of Owner under this Section 2 may
be provided under blanket policies obtained by PGRLP and that may also cover
other properties in which PGRLP or its Affiliates and/or related parties have
interests. Likewise, the insurance policies to be maintained by Manager for
itself and its employees under this Section 2 may be provided under blanket
policies obtained by Manager and that also may cover other properties managed by
Manager.
3. Proprietary Interest. The systems, methods, procedures and controls
employed by Manager including, without limitation, the Accounting Procedures and
any written materials or brochures developed by Manager to document the same are
to remain and shall be the property of Manager provided, however, that Manager
shall provide Owner with a copy or copies of such materials and brochures upon
request. The books, records and reports to be prepared by Manager pursuant to
this Agreement will be and remain Owner's property, provided, however, that
Manager will have the right to make and retain copies of any or all of the
foregoing. Manager agrees to keep and maintain the books and records of the
Owner that are prepared and maintained by Manager pursuant to this Agreement
confidential; provided, however, that the foregoing agreement of Manager shall
not apply to any disclosure of the books and records of Owner or any information
contained therein (a) as contemplated by this Agreement; or (b) as may be
required by applicable Legal Requirements or a court order or applicable
administrative rule or regulations or order of regulatory or supervisory agency
or authority of competent jurisdiction over such matter (in which case Manager
shall advise Owner of its intention to disclose the information (unless
prohibited by any Legal Requirement) and, if applicable, permit Owner to attempt
to obtain a protective court order with respect thereto).
4. Term of Agreement; Effect of Termination. (a) Unless this Agreement
is sooner terminated as provided in Section 5 below or in this Section 4, the
initial term of this Agreement shall commence on the date hereof and shall end
on the date that is seven (7) years after the commencement date (the "Initial
Term"). The Initial term of this Agreement is subject to renewal and extension
as follows: (i) at the end of the Initial Term, if Owner or any Affiliate (as
defined below) is the owner of the Property, then the Initial Term shall be
automatically extended for a period equal to the term of the loan obtained by
Owner or such Affiliate or Investor to refinance the loan encumbering the
Property at the time the Initial Term ends (the "First Renewal Term") and (ii)
after the First Renewal Term expires and for so long as Owner or any Investor or
any Affiliate owns the Property, the Term of this Agreement shall automatically
be renewed for successive one (1) year periods, with each such renewal period
commencing on the day after the expiration of the First Renewal Term or any
succeeding renewal period, as applicable, and ending on the first anniversary of
the commencement date of such renewal period (each such renewal period, together
with the Initial Term and the First Renewal Term, are referred to collectively
in this Agreement as the "Term").
(b) Notwithstanding the foregoing, this Agreement may be terminated (i)
by Owner (A) at any time after the date hereof for Cause (hereinafter defined),
or (B) upon the date of the closing of the sale of the Property, to any person
other than an Affiliate of Owner, and (ii) by Manager upon ninety (90) days'
prior written notice to Owner given at any time after the date hereof; provided,
however, that in the event of a termination by Manager pursuant to clause (ii)
above, Manager reasonably shall cooperate with and assist Owner, at Owner's cost
and expense and for a period not to exceed ninety (90) days after the effective
date of termination, in engaging a qualified replacement manager for the
Property and assisting such replacement manager in the transition.
Notwithstanding the foregoing, any transfer of PGRLP's membership interests in
Owner pursuant to the terms and conditions of the purchase option contained in
Section 11.2 of the Operating Agreement shall result in a termination of this
Agreement.
(c) Upon any termination of this Agreement pursuant to subsection (b)
above, except as provided in Section 5(c) below, the parties hereto shall have
no further rights, obligations or liabilities other than (i) the right of
Manager to receive and the obligation of Owner to pay to Manager (A) Management
Fees through the effective date of termination, (B) Leasing Fees in accordance
with Section 8 below for leases, lease amendments, lease modifications, lease
extensions or renewals, licenses and other agreements related to the use and
occupancy of the Property or any portion thereof executed (1) through the
effective date of termination and/or (2) within one hundred eighty (180) days
after the effective date of termination with any tenants or other parties with
respect to which Manager has conducted conversations or negotiations and has
notified Owner in writing prior to the date of termination, and (C) any other
amounts due and owing Manager as of the effective date of termination, and (ii)
Manager's obligation to reasonably cooperate with Owner, for a period of time
not to exceed ninety (90) days after the effective date of termination, to
facilitate a smooth transition of the management, marketing, leasing and
operation of the Property to a qualified replacement manager; provided, however,
that, upon the expiration or earlier termination of this Agreement for any
reason, the parties reasonably shall cooperate (at Owner's expense) to minimize
the impact of the change on the tenants and other occupants of the Property, and
during any such period (not to exceed ninety (90) days after the effective date
of termination) for which Manager provides services or assists in the operation
of the Property in connection therewith it shall be entitled to receive a
reasonable fee therefor.
(d) For the purposes of this Agreement, the term "Affiliate" shall mean
with respect to any natural person, corporation, limited liability company,
trust, general partnership, limited partnership, joint venture, union,
association, court, agency, government, tribunal, instrumentality, commission,
arbitrator, board, bureau or other entity or authority (each individually, a
"Person"), any other Person that directly, or indirectly through one or more
intermediaries, controls is controlled by, or is under common control with the
Person specified. For the purpose of this Section 4, "control" and words of
similar import shall mean the ability to direct or cause the direction of the
management or affairs of a Person, whether through the direct or indirect
ownership of voting interests, by contract or otherwise. For purposes of this
Agreement, "Cause" shall mean any Event of Default on Manager's part under
Sections 5(a)(ii) or 5(a)(iii) below.
5. Events of Default and Remedies.
(a) Defaults. Each of the following shall constitute an Event of
Default hereunder:
(i) if Owner shall fail, within five (5) days after the due
date with respect thereto, to pay or allow payment of any
installment of the Management Fees, the Leasing Fees and/or
any other amounts due and payable to Manager in accordance
with and/or pursuant to the terms and provisions of this
Agreement, except for any failure by the Lender to release any
portion of the Holdback Amount pursuant to the Loan Documents;
or
(ii) if either Owner or Manager fails to perform any of their
respective duties, obligations or covenants contained in this
Agreement (other than payment of monetary obligations and as
set forth in Section 5(a)(i) above) and such failure continues
for a period of ten (10) days after written notice from the
other party specifying such failure to perform and expressly
referencing the ten (10) day cure period in this Section
5(a)(ii) (unless such failure is of a nature that cannot
reasonably be cured within such 10-day period, in which event,
the defaulting party shall have as much time as is reasonably
necessary to cure such default/failure provided and subject to
the condition that such defaulting party commences such cure
within such 10-day period and diligently continues to pursue
such cure to completion).
(b) Remedies. At any time after the occurrence and during the
continuance of an Event of Default, the party who has not committed or
suffered the Event of Default may, at its option, and at any time prior
to the cure of such Event of Default, terminate this Agreement by
giving written notice to the other party and, except as provided in
this Agreement, shall be entitled to exercise all rights and remedies
available under this Agreement, at law and in equity; provided,
however, that Owner may cause the effective date of any termination by
Manager to be deferred for up to thirty (30) days to afford Owner the
opportunity to engage a replacement manager of the Property and to
facilitate a smooth transition to such replacement manager. If this
Agreement shall be terminated as aforesaid, Manager shall be entitled
to receive, and Owner shall pay, a reasonable fee for such transition
services up to and including the effective date of such termination,
which fee will be netted out against costs of termination and replacing
Manager if this Agreement has been terminated for Cause.
6. Facility Operations.
(a) No Guarantee of Profitability. Manager does not guarantee that
management, marketing, leasing and operation of the Property will be
profitable.
(b) Standard of Performance; Acting within Budget(b) Standard of
Performance; Acting within Budget. In performing its obligations under
this Agreement, Manager shall use commercially reasonable efforts and
act in good faith and with professionalism in accordance with the
Annual Budgets and the prevailing standards of Class A office buildings
in Chicago, Illinois.
(c) Force Majeure. Notwithstanding anything contained in this Agreement
to the contrary, the parties hereby agree that neither shall be deemed
to be in violation or default of or under this Agreement if they are
prevented from performing any of their respective duties, obligations,
covenants or agreements hereunder (other than any obligations related
to the payment of money with respect to which this provision shall not
apply) for any reason beyond the reasonable control of the party that
claims to have been so prevented from performing such duties,
obligations, covenants or agreements, including, without limitation,
strikes, shortages, war, acts of terrorism, acts of God, or any
applicable statute, regulation or rule of federal, state or local
government or agency thereof having jurisdiction over the Property or
the operations thereof (collectively, "Force Majeure Events");
provided, however, that such non-performing party shall only be excused
from the performance of its duties, obligations, covenants and/or
agreements for so long as such Force Majeure Event exists.
7. Withdrawal of Funds by Manager. Owner and Manager acknowledge and
agree that the efficient operation of the Property requires that Manager have
ready access to the funds required therefor. Accordingly, Owner shall not have
any right to withdraw funds from the Property's Operating Account.
8. Fees.
(a) During the Term of this Agreement, Manager shall be
entitled to receive, and Owner shall pay to Manager, on a monthly
basis, management fees (the "Management Fees") in an amount equal to
two percent (2%) of the monthly Gross Revenues of the Property during
each month or portion thereof occurring during Term, until such time as
there are signed leases pursuant to which the tenants have commenced
paying rent for ninety percent (90%) of the rentable square footage of
the Property, exclusive of the parking garage and any storage space in
the Property (the "Leasing Target"); and from and after the date the
Property achieves the Leasing Target, the Management Fees shall be
increased to two and one-half percent (2.5%) of the monthly Gross
Revenues of the Property (whether or not leasing at the Property later
falls below the Leasing Target). Management Fees with respect to a
particular month shall be due and payable by Owner to Manager promptly
(i.e., within five (5) business days) after the delivery by Manager to
Owner of the Monthly Statement for such particular calendar month and
on a pari passu basis with the UST Administrative Fee. In addition, a
schedule of leasing commissions and fees payable to Manager and Outside
Brokers is attached hereto as Schedule B and made a part hereof.
Manager shall be entitled to receive and, if and as applicable, pay to
Outside Brokers leasing commissions (the "Leasing Fees") in accordance
with Schedule B hereto; provided, however, that Leasing Fees payable to
Manager (as opposed to Outside Brokers) shall be paid on a pari passu
basis with the UST Administrative Fee. All Leasing Fees payable to
Manager will be paid within ten (10) days after Manager submits an
invoice to Owner for the payment of such Leasing Fees, subject to the
release by Lender of the Holdback Amount pursuant to the Loan Documents
for any amounts to be paid from the Holdback Amount. Leasing Fees
payable to Outside Brokers will be due and payable in accordance with
Schedule B attached hereto and the terms and conditions of the Outside
Broker's commission agreement.
(b) For the purposes of this Agreement, the term "Gross
Revenues" shall mean all amounts actually collected as rents or other
charges for use and occupancy of the Property, but shall exclude: (i)
income derived from interest on investments or otherwise, (ii) proceeds
of claims on account of insurance policies (other than rent loss or
business interruption insurance), (iii) abatement or refund of taxes;
(iv) awards arising out of takings by eminent domain; (v) discounts and
dividends on insurance policies; (vi) receipts and other income from or
on account of vending machines and other concessions; (vii) all
purchase discounts, concessions, rebates and allowances; (viii)
reimbursement by any tenant, whether in a lump sum or in installments,
of expenditures made by Owner for tenant improvements; (ix) security,
cleaning and all other like deposits (until forfeited); and (x) parking
income, except that parking income shall not be excluded that is
collected during any period when Manager, rather than a third party, is
managing the parking facilities located at the Property. Gross Revenues
shall be reduced by any refund paid to a tenant respecting any sum that
was originally included in Gross Revenues. For the purpose of
determining Gross Revenues, income from automatic teller machines shall
not be deemed to be income from or on account of vending machines or
other concessions.
9. Assignment. This Agreement shall not be assigned (including by
operation of law, whether by merger, consolidation or otherwise) by Owner or
Manager without the prior written consent of the other party hereto; provided,
however, that (a) Manager may assign this Agreement without Owner's consent (i)
to any Affiliate of Manager, or (ii) to any entity in connection with any
merger, consolidation, reorganization, sale, liquidation or similar transaction
with respect to Manager, any of its Affiliates or related parties; and (b) Owner
may collaterally assign this Agreement without Manager's consent pursuant to
Section 1(a)(iv) of this Agreement. No assignment by Manager shall relieve
Manager of its liability hereunder which shall continue in full force and shall
be joint and several with that of the assignee.
10. Notices. Any notices required or permitted to be sent hereunder
shall be in writing and be delivered personally or mailed, certified mail,
return receipt requested, or delivered by nationally-recognized, overnight
courier service to the following addresses, or such other addresses as shall be
given by notice delivered hereunder, and shall be deemed to have been given upon
delivery, if delivered personally, three (3) business days after mailing, if
mailed, or one (1) business day after delivery to the courier, if delivery by
overnight courier service:
If to Owner, to:
Estein & Associates USA, Ltd.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
With a copy to:
Prime Group Realty, L.P.
c/o Prime Group Realty Trust
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▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
And with copy to:
▇▇▇▇▇ ▇▇▇▇▇ Ciklin ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇'▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
If to Manager, to:
Prime Group Realty Services, Inc.
c/o Prime Group Realty Trust
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▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
With a copy to:
Prime Group Realty Trust
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▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
and a copy to:
Jenner & Block
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▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
10. Relationship of the Parties. The relationship of Manager to Owner
in connection with this Agreement shall be that of an independent contractor,
and all acts performed by Manager during the Term hereof shall be deemed to be
performed in Manager's capacity as an independent contractor. Nothing contained
in this Agreement is intended to or shall be construed to give rise to or create
a partnership or joint venture or lease between Owner, its successors and
assigns, on the one hand, and Manager, its successors and assigns, on the other
hand.
11. Entire Agreement, Governing Law; Amendments. This Agreement and any
documents executed in connection herewith contain the entire agreement among the
parties and shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns (subject, however, to the terms of
Section 9 above), and shall be construed and interpreted in accordance with the
laws of the State of Illinois. This Agreement may not be modified or amended
except by written instrument signed by the parties hereto.
12. Contract Modifications for Certain Legal Events. In the event any
state or federal laws or regulations, whether now existing or enacted or
promulgated after the effective date of this Agreement, are interpreted by
judicial decision, a regulatory agency or legal counsel of both parties in such
a manner as to indicate that the structure of this Agreement may be in violation
of such laws or regulations, Owner and Manager agree to cooperate reasonably in
restructuring their relationship and this Agreement to eliminate such violation
or to reduce the risk thereof to the extent such restructuring can be
accomplished upon commercially reasonable terms; provided, that any such
restructuring shall, to the maximum extent possible, preserve the underlying
economic and financial arrangements between Owner and Manager set forth in this
Agreement. The parties agree that such amendment may require either or both
parties to obtain appropriate regulatory licenses and approvals.
13. Captions. The captions used herein are for convenience of reference
only and shall not be construed in any manner to limit or modify any of the
terms hereof.
14. Severability. In the event one or more of the provisions contained
in this Agreement is deemed to be invalid, illegal or unenforceable in any
respect under applicable law, the validity, legality and enforceability of the
remaining provisions hereof shall not in any way be impaired thereby.
15. Remedies Cumulative; No Waiver. No right or remedy herein conferred
upon or reserved to any of the parties hereto is intended to be exclusive of any
other right or remedy, and each and every right and remedy shall be cumulative
and in addition to any other right or remedy given hereunder, or now or
hereafter legally existing upon the occurrence of an Event of Default hereunder.
The failure of any party hereto to insist at any time upon the strict observance
or performance of any of the provisions of this Agreement or to exercise any
right or remedy as provided in this Agreement shall not impair any such right or
remedy or be construed as a waiver or relinquishment thereof with respect to
subsequent defaults. Every right and remedy given by this Agreement to the
respective parties hereto may be exercised from time to time and as often as may
be deemed expedient by such parties. To the extent either party hereto incurs
legal fees and expenses in connection with such party's enforcement of any of
its rights hereunder as a result of a breach of this Agreement by the other
party hereto (the "Breaching Party"), then, to the extent it is determined by a
court having competent jurisdiction over such dispute, that the Breaching Party
had committed the alleged breach of this Agreement, then the Breaching Party
shall pay all such reasonable attorneys' fees and expenses incurred by the other
party in connection with such enforcement.
16. Subordination. All rights of Manager hereunder shall be subject and
subordinate at all times to all mortgages or deeds of trust which may now or
hereafter be outstanding on the Property or the improvements thereon, and to all
renewals, modifications, consolidations, replacements and extensions thereof and
Manager shall execute any subordination agreement reasonably required by the
holder of any such mortgage or deed of trust.
17. Survival. All representations, warranties, agreements, obligations
and indemnities of the parties hereto arising prior to the expiration or other
termination of this Agreement shall survive such expiration or other
termination.
18. Further Actions. Owner and Manager agree to do, execute,
acknowledge and deliver all contracts, agreements and other documents and to
take all actions reasonably necessary or desirable to comply with the provisions
of this Agreement and the intent thereof.
19. No Third Party Beneficiaries. This Agreement is for the sole and
exclusive benefit of the parties hereto and their respective successors and
assigns, and no third party is intended to or shall have any rights hereunder.
20. Time of Essence. Time is of the essence of this Agreement and the
provisions contained herein.
21. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, and each such counterpart
shall together constitute but one and the same Agreement.
22. Default Rate. Except and otherwise provided in this Agreement, any
amount which is not paid when due hereunder shall bear interest from the date
due until the date paid at the annual interest rate equal to the Prime Rate in
effect from time to time during such period plus six percent (6%), but in no
event higher than the maximum rate permitted by law (the "Default Rate"). For
purposes of this Agreement, the "Prime Rate" shall mean the rate of interest
determined on a daily basis and listed in the Wall Street Journal as the prime
date of interest. If the Wall Street Journal ceases to publish the prime rate of
interest, the Prime Rate shall be equal to the prime rate or corporate base rate
of interest then announced by a national lending institution selected by
Manager.
23. Rule of Construction. For the purposes of this Agreement, the words
"hereunder", "hereof", "herewith" and "herein", and words of similar import,
shall refer to this Agreement as a whole and not any particular section of this
Agreement.
24. Indemnification.
(a) Owner shall indemnify, defend and hold Manager and its
Affiliates and their respective officers, directors,
shareholders, employees, trustees, agents and assigns harmless
from and against any and all claims, demands, action
(including enforcement proceedings initiated by any government
agency), penalties, suits and liabilities (including the cost
of defense, settlement, appeal and reasonable attorneys' fees
and costs, but excluding consequential damages), which they or
any of them may have alleged against them, incur, become
responsible for, or pay out for any reason related to: (i)
ownership or operation of the Property, including the
employment and discharge of personnel (unless arising as a
result of an act or omission of Manager) and matters
pertaining to the accessibility of the Property to persons
with disabilities (but Manager agrees to call to Owner's
attention any such matter that comes to Manager's attention);
(ii) an Event of Default by Owner with respect to any
provision of this Agreement; (iii) contamination of or any
adverse effects on the environment with respect to the
Property (but Manager agrees to call to Owner's attention any
such matter that comes to Manager's attention); (iv) any
violation of any Legal Requirements (but Manager agrees to
call to Owner's attention any such matter that comes to
Manager's attention); provided, however, that in no event
shall Owner's indemnification obligations under this Section
24 extend to any negligence, willful misconduct or fraud
committed by Manager or its employees in the performance of
Manager's duties under this Agreement, or for Manager's breach
of this Agreement.
(b) To the extent not covered by any liability insurance actually
carried by Owner (which such insurance shall include a waiver
of subrogation), Manager shall indemnify, defend and hold
Owner and its Affiliates and their respective members,
officers, employees, agents and assigns harmless from and
against any and all claims, demands, actions (including
enforcement proceedings initiated by any government agency),
penalties, suits and liabilities (including the cost of
defense, settlement, appeal and reasonable attorneys' fees and
costs, but excluding consequential damages), which they or any
of them may have alleged against them, incur, become
responsible for, or pay out for any reason, to the extent such
matters are caused by Manager's negligence, willful misconduct
or fraud, or Manager's breach of this Agreement. Any
deductible under Owner's liability insurance policy shall be
paid by Owner.
(c) Each of Owner and Manager hereby waives all claims and rights
of recovery against the other and their respective officers,
directors, shareholders, representatives, trustees, employees,
agents, Affiliates and assigns for any loss or damage to their
respective properties or interests, which loss is insured
against, or required to be insured against, by Owner or
Manager (as applicable) pursuant to this Agreement, regardless
of fault or negligence, to the extent of the amount so covered
and any applicable deductible.
(d) The obligations set forth in this Section 24 shall survive any
termination of this Agreement.
25. Business Interruption. If the Property suffers damage or loss that
results in an interruption in the operations of the Property other than due to a
Force Majeure Event, Owner shall nevertheless be obligated to pay to Manager all
amounts that would be due to Manager under this Agreement, including the
Management Fee, Leasing Fees, and all Reimbursable Expenses, for the period of
the business interruption. In the event of such a business interruption, the
Management Fee shall be calculated based on (i) the Gross Revenue for the
portion of the Property, if any, not subject to the damage or loss, and (ii) a
proportionate amount of any business interruption insurance received with
respect to the damaged portion of the Property related to the Management Fee.
Owner shall, immediately on receipt, deposit any and all proceeds of business
interruption insurance received by Owner in the Company Account and shall
continue to fund the Operating Account in the manner required under this
Agreement using the proceeds of such business interruption insurance, to the
extent necessary.
26. Manager Assumes No Liability. Manager assumes no liability
whatsoever for any acts or omissions of Owner, or any previous owners of the
Property, or any previous management or other agent of either. Manager assumes
no liability for any failure of or default by any tenant in the payment of any
rent or other charges due Owner or in the performance of any obligations owed by
any tenant to Owner pursuant to any lease or otherwise. Nor does Manager assume
any liability for previously unknown and/or known violations of environmental or
other regulations which may become known during the period in which this
Agreement is in effect, unless such violations are the result of such Manager's
bad faith, gross negligence or willful misconduct or Manager acting clearly
outside the scope of its authority on or after the date hereof. In addition,
Manager shall not be liable for and assumes no liability whatsoever for any
obligations, liabilities or claims made in connection with or pursuant to any of
the Contracts and Leases executed and delivered by Manager as Owner's agent and
authorized representative pursuant to the terms and conditions of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Management and
Leasing Agreement to be executed and delivered in their names and on their
behalf as of the date first set forth above.
OWNER:
DEARBORN CENTER, L.L.C., a Delaware limited
liability company
By: UST XI Dearborn, Ltd.,
a Florida limited partnership,
its administrative member
By: ▇▇▇▇ Chicago, L.C.,
a Florida limited liability
company, its general partner
By: Estein Management Corporation,
a Florida corporation,
its manager
By:
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▇▇▇▇▇▇ ▇▇▇▇▇▇, President
MANAGER:
PRIME GROUP REALTY SERVICES, INC.,
a Maryland corporation
By:
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Name:
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Title:
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SCHEDULE A
Legal Description
Lots 5, 6, 7 and that part of Lot 8 lying East of the East line of Dearborn
Street (excepting therefrom the North 9 feet of said Lots taken for alley) in
Block 141 in School Section Addition to Chicago in ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇, ▇▇▇▇ of the Third Principal Meridian, in ▇▇▇▇ County, Illinois.
SCHEDULE B
LEASING COMMISSION/FEE SCHEDULE
1. Defined Terms. All capitalized terms used but not defined herein shall have
the meanings ascribed to such terms in the Agreement to which this Leasing
Commission/Fee Schedule (the "Commission Schedule") is attached as Schedule B.
For purposes of this Agreement, the following terms have the following meanings:
"Average Annual Fixed Minimum Rent" means, with respect to a Lease (as
hereinafter defined), the actual total base rent or actual fixed minimum rent
payable by the tenant under such Lease (taking into account all "free rent" or
other rent concessions given to the tenant thereunder) for the entire initial
term of the Lease divided by the number of years in the initial term of the
Lease, and specifically excludes (i) any rental escalation based on changes in
operating expenses, taxes, the consumer price index or any similar index; (ii)
any percentage or other similar type of contingent rent; (iii) any portion of
the rent specifically allocated as payment for electricity or other utilities,
taxes, insurance or other operating expenses; (iv) any parking fees or charges;
(v) any late charges, interest or attorneys fees or other items of additional
rent; (vi) any amounts payable to the landlord on account of profit arising from
the assignment or subletting of the leased premises demised by the Lease and
(vii) any free or abated rent. If the rent payable under any Lease is calculated
on a gross basis, rather than a net basis, Average Annual Fixed Minimum Rental
for such Lease shall be calculated based on what the amount of Average Annual
Fixed Minimum Rental would be if it were calculated for such Lease on a net
basis, as opposed to a gross basis (i.e., by subtracting from such annual gross
rental rate the component of the gross rental rate attributable to the current
annual additional rent charges for the Property).
"Existing Lease" means any Lease to which Owner is a party as of the
date of the Agreement.
"Expansion" means the exercise of any option, right of first refusal,
right of first offer or other right (an "Option") under an Existing Lease or a
New Lease (as hereinafter defined) with respect to the leasing of additional
space in the Property ("Additional Space"); provided, and subject to the
condition that such Option with respect to Additional Space is irrevocably
exercised by the tenant not later than one hundred eighty (180) days following
the expiration date of the Term of the Agreement.
"Lease" means any lease, sublease, license, and/or occupancy agreement
entered into by Owner and pursuant to which any Person is granted a possessary
interest in or right to use and occupy space in the Property including, without
limitation, any New Lease and any Existing Lease, and any modification or
amendment to a Lease resulting in a lease of Additional Space or First Hold
Space.
"New Lease" means each Lease executed by Owner and the tenant thereto
and delivered to the tenant thereto within 180 days after the expiration of the
Term (other than a Renewal or an Expansion).
"Renewal" means the exercise of any extension or renewal pursuant to
the terms of a New Lease or an Existing Lease, or except as otherwise provided
in this Commission Schedule, with respect to any additional period of tenancy
for an existing tenant (whether pursuant to a New Lease or an Existing Lease);
provided and subject to the condition that such extension or renewal is
irrevocably exercised by the tenant no later than one hundred eighty (180) days
following the expiration date of the Term.
2. Rates. Commissions shall be payable at the following rates:
(a) With respect to New Leases (and with respect to First Hold
Space (as hereinafter defined) and Leases of Additional Space as
described in Sections 4(a) and 4(b), respectively), an amount equal to
the sum of: (i) eight percent (8%) of one year's Average Annual Fixed
Minimum Rent plus (ii) the product of three percent (3%) of the
product of the Average Annual Fixed Minimum Rent multiplied by the
number of additional years (up to fifteen (15)) during the initial
term of the Lease after the first year.
(b) With respect to any Renewal or Expansion pursuant to a
Lease (that is not First Hold Space or a Lease of Additional Space as
described in Sections 4(a) and 4(b), respectively), three percent (3%)
of the product of the Average Annual Fixed Minimum Rent multiplied by
the number of years (up to fifteen (15)) during the term of such
Extension or Renewal.
3. Schedule of Payments. Commissions will be deemed earned and will be paid as
follows:
(a) With respect to any New Lease, (i) one-half (1/2) of the
commissions shall be paid upon the delivery of a fully executed Lease
and (ii) one-half (1/2) shall be paid upon the earlier of (1) tenant
occupancy of any portion of its leased premises and (2) commencement of
rent under the Lease.
(b) With respect to any First Hold Space, (i) one-half (1/2)
of the commissions shall be paid on the date the tenant irrevocably
exercises its First Hold Space Option and (ii) one-half (1/2) of the
commissions shall be paid upon the earlier of (1) tenant occupancy of
any portion of its leased premises and (2) commencement of rent under
the Lease.
(c) With respect to any Leases of Additional Space pursuant to
any Lease as hereinafter described in Section 4(b), (i) one-half (1/2)
of the commissions shall be paid upon the delivery of a fully executed
Lease and (ii) one-half (1/2) of the commissions shall be paid upon the
earlier of (1) tenant occupancy of any portion of its leased premises
and (2) commencement of rent under the Lease.
(d) With respect to any Renewal or Expansion (other than with
respect to First Hold Space and Leases of Additional Space as described
in Sections 4(a) and 4(b), respectively), commissions shall be paid in
full at such time as the tenant shall have irrevocably exercised its
option thereunder and the renewal term shall have commenced.
(e) Notwithstanding the foregoing, if the tenant or guarantor
under any Lease has an investment grade rating, all commissions shall
be paid upon delivery of a fully executed Lease, amendment or
modification of Lease, or irrevocable exercise of an Option, as
applicable.
4. First Hold and Additional Space.
(a) Owner shall pay Manager a commission equal to the
commission payable for a New Lease with respect to the exercise of any option or
right under any Lease of Additional Space (the "First Hold Space") prior to the
commencement of the tenant's lease term (the "First Hold Space Option"). Such
commission shall be deemed earned at such time as the First Hold Space Option is
irrevocably exercised by the applicable tenant.
(b) Owner shall pay Manager a commission in connection with
the Lease of Additional Space by a tenant under any Lease, which Additional
Space is not leased pursuant to any option or right contained in such Lease, as
follows. If a tenant shall remain in, or remain liable for, all of its space
under the terms of any Lease (such space, the "Original Space"), and enters into
a Lease for Additional Space not later than one hundred eighty (180) days
following the expiration date of the Term, then Manager shall be entitled to a
commission on such Lease for Additional Space as if such Lease for Additional
Space were a New Lease under the terms hereof. If the tenant shall be relieved
of its obligations with respect to any or all of its Original Space in
connection with its Lease of Additional Space, Manager shall be paid a
commission, if any, at the market rate for Class A space in the Chicago central
business district to be negotiated by the parties at such time. The provisions
of Section 7(a) below with respect to the vesting of commissions shall apply to
any commission payable under this Section 4(b). Such commission shall be subject
to the terms of Sections 5(a) and 5(b) below.
5. Outside Brokers.
(a) If a licensed real estate broker other than Manager (an
"Outside Broker") is the procuring cause of a Lease or extension or modification
thereof or represents the tenant thereof, Owner shall pay such Outside Broker
the amount required pursuant to such Outside Broker's written brokerage or
commission agreement, provided, however, that the amount of any such commission
shall not be greater than the product of $1.00 per rentable square foot of space
subject to such Lease, multiplied by the number of years (not to exceed fifteen
(15)) in the term of such Lease (e.g., for a ten-year lease for 30,000 rentable
square feet, the commission to the Outside Broker would be equal to $300,000
($1.00 x 30,000 x 10)), unless Owner shall otherwise agree in writing.
(b) If an Outside Broker is the procuring cause of a Lease or
extension or modification thereof or represents the tenant thereof and is due a
commission under Section 5(a) above, Owner shall pay to Manager a commission
which shall be equal to one-half (1/2) of the amount otherwise payable in
accordance with this Commission Schedule. Unless otherwise expressly agreed to
in writing by Owner, in no event shall an Outside Broker be paid a commission
for the contraction of a tenant's leased space within the Property, a relocation
of a tenant's leased space within the Property, or a financial reconstitution of
a tenant's lease (i.e., a readjustment of the rental amounts); provided,
however, that the foregoing shall not apply to any initial commission paid to an
Outside Broker. Nothing contained herein shall be deemed to create any right in
any Outside Broker as a third party beneficiary and neither Owner nor Manager
shall have any obligation of any kind with respect to any Outside Broker unless
a written commission agreement is executed between Owner or Manager and such
Outside Broker.
6. Retail Leases. Owner and Manager acknowledge that Mid-America Real Estate
Corporation ("Mid-America") and Owner are parties to that certain Leasing Agency
Agreement dated March 31, 2003 (the "Agency Agreement"). Owner shall pay all
commissions due and payable under the Agency Agreement in accordance with the
terms and conditions of the Agency Agreement. Manager shall not be entitled to
any commissions in connection with any such Leases. Notwithstanding the
foregoing, Manager shall be entitled to receive a commission with respect to any
Lease, Expansion or Renewal in the retail portion of the Property if Mid-America
is not entitled to a commission for such Lease, Expansion or Renewal under the
terms and conditions of the Agency Agreement. Any such commission to Manager
shall be determined in accordance with Section 2 of this Commission Schedule;
provided, however, that if such Lease is a retail Lease (as opposed to an office
Lease), Manager's commission shall be computed using a three percent (3%)
commission rate for the entire term of such Lease (up to fifteen years). Manager
shall have the right, on Owner's behalf, to terminate or extend the term of the
Agency Agreement.
SCHEDULE C
ANNUAL BUDGETS FOR 2003 - 2004
[INTENTIONALLY OMITTED]
SCHEDULE D
PERMITTED SERVICES TO TENANTS
o After hours dock usage
o After hours freight elevator usage
o Additional security services
o Light bulb/ballast replacements
o Locksmith services (keys,lock changes, etc.)
o Security access cardkey replacements or additions
(beyond initial move-in)
o Moving of furniture/equipment or furniture reconfiguration
o Delivery assistance
o Hanging of pictures/bulletin boards
o Installation of shelving or cabinets
o Painting services
o Carpentry services
o Construction services
o Property disposal
o Day ▇▇▇▇▇▇ services (additional cleaning services)
o Telecommunication/riser services
o Additional signage
o Additional cleaning services (refrigerator cleaning, microwave
cleaning, pantry/kitchen special cleaning, gym/health club cleaning,
executive shower cleaning, purchase of additional cleaning or paper
products, Saturday or Sunday additional cleaning services, etc.)
o Carpet cleaning
o Electrical services (outlet installation, dedicated outlet,
additional lighting, workstation wiring, etc.)
o Supplemental HVAC systems or upgrades/HVAC modifications to provide
additional zones
o Additional cable television services
o Various purchases/installations requested by tenant (examples could
include: purchase and installation of privacy partition in restrooms;
purchasing of gondolas or other trash containers, etc.)
o Parking garage services
o Interior design or decorating
o Day care/child care services
o Concierge services, to the extent the services provided are over and
above the concierge services generally provided at the Property
o Maintenance in tenant's space, to the extent the maintenance provided
is over and above the maintenance services generally provided at the
Property
o Any other similar services the charges for which do not exceed
market rates.
EXHIBIT III
Amended and Restated Operating Agreement
[SEE ATTACHED]
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
Dearborn Center, L.L.C.
Dated as of ________________, 2003
TABLE OF CONTENTS
ARTICLE I DEFINITIONS.................................................1
Section 1.1 Certain Definitions.................................1
ARTICLE II formation...................................................8
Section 2.1 Formation of Company................................8
Section 2.2 Name of Company.....................................8
Section 2.3 Purposes and Objectives.............................8
Section 2.4 Term................................................8
Section 2.5 Principal place of Business.........................8
ARTICLE III REPRESENTATIONS, WARRANTIES, AND ACKNOWLEDGMENTS............9
Section 3.1 Representations of the Members......................9
Section 3.2 Effect of this Agreement............................9
Section 3.3 Litigation..........................................9
ARTICLE IV CAPITAL CONTRIBUTIONS......................................10
Section 4.1 Capital Account....................................10
Section 4.2 Capital Contributions..............................10
Section 4.3 Contributions of Invested Capital..................11
Section 4.4 Return of Capital..................................12
ARTICLE V ALLOCATIONS AND DISTRIBUTIONS..............................12
Section 5.1 Cash Distribution..................................12
Section 5.2 Distributions of Distributable Cash................12
Section 5.3 Net Sale or Refinancing Proceeds...................13
Section 5.4 Allocations of Profit..............................14
Section 5.5 Losses.............................................14
ARTICLE VI ACCOUNTING, TAXATION, AND OTHER MATTERS....................15
Section 6.1 Company Fiscal Year................................15
Section 6.2 Location of Records; Inspection....................15
Section 6.3 Books of Account...................................15
Section 6.4 Reports............................................15
Section 6.5 Taxation...........................................16
Section 6.6 Tax Returns and Audits.............................18
Section 6.7 Other Reports......................................19
Section 6.8 Bank Accounts; Investments.........................19
Section 6.9 Insurance..........................................19
Section 6.10 Record Retention...................................20
Section 6.11 The Company Accountant.............................20
Section 6.12 Delegation of Responsibility.......................20
ARTICLE VII MANAGEMENT OF THE COMPANY..................................20
Section 7.1 Administrative Member..............................20
Section 7.2 Duties of Administrative Member; Agents............21
Section 7.3 Major Decisions....................................21
Section 7.4 Non-Delegation.....................................23
Section 7.5 Prime Assumed Obligations..........................23
Section 7.6 REIT Compliance....................................23
ARTICLE VIII OTHER BUSINESS.............................................25
Section 8.1 Conflicts of Interest..............................25
Section 8.2 German Interests...................................25
ARTICLE IX TRANSFERABILITY............................................26
Section 9.1 General............................................26
Section 9.2 Notwithstanding the foregoing, no consent shall be
required if the Transferee is an Affiliate
of the Transferor..................................26
Section 9.3 Permitted Transfers................................26
Section 9.4 Transferee Not Member in Absence of Consent........26
ARTICLE X DISSOLUTION AND TERMINATION................................27
Section 10.1 Dissolution........................................27
Section 10.2 Termination........................................27
Section 10.3 Activities During Wind Up..........................27
Section 10.4 Liquidation........................................27
ARTICLE XI PURCHASE OPTIONS...........................................28
Section 11.1 Prime Purchase Option..............................28
Section 11.2 UST Purchase Option................................29
Section 11.3 General Conditions.................................30
Section 11.4 Enforcement........................................31
Section 11.5 Continuation of Options............................31
ARTICLE XII NO WAIVER..................................................31
ARTICLE XIII NO RIGHT TO PARTITION......................................32
ARTICLE XIV GENERAL....................................................32
Section 14.1 Entirety of Agreement..............................32
Section 14.2 Notices............................................32
Section 14.3 Further Assurances.................................33
Section 14.4 Applicable Law and Choice of Forum.................33
Section 14.5 Counterparts.......................................33
Section 14.6 Headings...........................................34
Section 14.7 Waiver.............................................34
Section 14.8 Public Announcements...............................34
Section 14.9 Pronouns and Plurals...............................34
Section 14.10 Force Majeure......................................34
Section 14.11 Section Numbers....................................34
Section 14.12 Notice of Litigation...............................35
Section 14.13 Severability.......................................35
Section 14.14 No Drafting Presumption............................35
Section 14.15 Third-Party Beneficiaries..........................35
Section 14.16 Remedies...........................................35
Section 14.17 Designation of Forum and Consent to Jurisdiction...35
Section 14.18 Waiver of Jury Trial...............................35
Section 14.19 Binding Agreement..................................35
Section 14.20 Exculpation........................................35
Section 14.21 Performance/Holidays...............................36
EXHIBIT A Loan Documents
EXHIBIT B Annual Plans
EXHIBIT C Restricted Services
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
This Amended and Restated Limited Liability Company Agreement
("Agreement") is entered into as of the __________ day of ____________________,
2003 (the "Effective Date"), between UST XI DEARBORN, LTD. ("UST"), a limited
partnership organized under the laws of the State of Florida, and PRIME GROUP
REALTY, L.P. ("Prime"), a limited partnership organized under the laws of the
State of Delaware, both of which are sometimes referred to as the "Members" and
individually as a "Member." In consideration of the mutual promises contained
herein the Members agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Certain Definitions. Without limitation of the
applicability of other defined terms used herein, the following terms shall have
the following meanings when used in this Agreement:
1.1.1 "Act" means the Delaware Limited Liability Company Act.
1.1.2 "Additional Capital Contributions" shall have the meaning set
forth in Section 4.2.2.
1.1.3 "Administrative Member" shall have the meaning set forth in
Section 7.1.
1.1.4 "Affiliate" means any Person directly or indirectly controlling,
controlled by or under common control with another Person, with control in such
context meaning the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of another, whether
through the ownership of voting securities, by contract or otherwise.
1.1.5 "Annual Plans" shall have the meaning set forth in Section
7.2(b).
1.1.6 "Bank One" shall have the meaning set forth in Section 11.3.5.
1.1.7 "Bank One Lease" shall have the meaning set forth in Section
11.3.5.
1.1.8 "Bank One First Offer Rights" shall have the meaning set forth in
Section 11.3.5.
1.1.9 "Bank One Rights" shall have the meaning set forth in Section
11.3.5.
1.1.10 "Capital Account" shall have the meaning set forth in Section
4.1.1.
1.1.11 "Capital Contribution" means, with respect to any Member, the
amount of money and the initial fair market value of any property (other than
money), net of the amount of any debt to which such property is subject,
contributed to the Company with respect to the Membership Interest in the
Company held by such Member. The Capital Contributions of the Members on the
date of this Agreement are detailed in Section 4.2.1 of this Agreement.
1.1.12 "Capital Transaction" shall mean (a) any event or Company
transaction (other than receipt of a Capital Contribution) not in the ordinary
course of the Company's business, including (i) a sale or other disposition of
all or substantially all of the Property, and (ii) any damage to or
condemnation, destruction or loss of all or any portion of the Company's assets
resulting in receipt by the Company of condemnation awards or insurance proceeds
on the basis of actual or constructive total loss (other than business
interruption insurance proceeds), in excess of the amounts, if any, of such
awards or proceeds applied to the acquisition or reconstruction of Company
assets; and (b) any financing or refinancing of all or substantially all of the
Company's assets or of indebtedness of the Company.
1.1.13 "City Agreement" means that certain Dearborn Center
Redevelopment Agreement dated August 1, 2002 between the City of Chicago and the
Company as amended, modified and supplemented as of the date hereof.
1.1.14 "Code" means the Internal Revenue code of 1986, as amended, or
any successor or replacement statute.
1.1.15 "Company" means Dearborn Center, L.L.C., a Delaware limited
liability company.
1.1.16 "Company Accountant" shall have the meaning set forth in Section
6.11.
1.1.17 "Company Accounts" shall have the meaning set forth in Section
6.8.
1.1.18 "Contribution Agreement" means the Contribution Agreement dated
as of __________________, 2003, between ▇▇▇▇ and Prime, which has been assigned
by ▇▇▇▇ to UST.
1.1.19 "Current Leases" shall mean, for purposes of determining the
purchase price under the Prime Purchase Option or the UST Purchase Option, as
applicable, all signed leases for space in the Property; provided, however, that
Current Leases shall not include any lease for which a tenant has notified the
Company in writing that such tenant is terminating the lease pursuant to a
termination clause included in such lease.
1.1.20 "Depreciation" means for each Company fiscal year or other
period, an amount equal to the depreciation, amortization, or other cost
recovery deduction allowable for Federal income tax purposes with respect to an
asset for such year or other period, except that if an asset of the Company is
reflected on the books of the Company at a book value that differs from the
adjusted tax basis of such asset pursuant to Section 1.704-1(b) (2) (iv) (d) or
1.704-1(b) (2) (iv) (f) of the Regulations, depreciation, amortization, or other
cost recovery deductions shall be computed for book purposes with respect to
such asset pursuant to Section 1.704-1(b)(2)(iv)(g) of the Regulations.
1.1.21 "Distributable Cash" shall have the meaning set forth in Section
5.1.
1.1.22 "Distribution Date" means each date on which a distribution of
Distributable Cash is to be made pursuant to Section 5.1.
1.1.23 "Effective Date" means, ____________, 2003, which is the date
the closing occurs pursuant to Section 12.1 of the Contribution Agreement.
1.1.24 "Initial Invested Capital" means the Invested Capital of the
Members on the date of this Agreement. The Initial Invested Capital of the
Members on the date of this Agreement is set forth in Section 4.3(a) of this
Agreement.
1.1.25 "Invested Capital" means and includes the UST Invested Capital
or the Prime Invested Capital, as applicable.
1.1.26 "Invested Capital Threshold" shall mean the amount that must be
received by UST to return to UST the UST Invested Capital plus a return on the
UST Invested Capital in effect from time to time of 12.5% compounded annually,
after taking into account all prior distributions made to UST, if any, under
Sections 5.2 and 5.3 of this Agreement.
1.1.27 "Leasing Condition" shall have the meaning set forth in Section
4.3(b).
1.1.28 "Loan" and "Loans" means, as applicable, and as existing from
time to time during the term of this Agreement, any indebtedness for borrowed
money secured by the Property (or the Membership Interests) and approved in
writing by UST and Prime including, without limitation, the loan contemplated by
the Loan Documents.
1.1.29 "Loan Documents" means the loan documents set forth in Exhibit A
and the Loan contemplated thereby. As Loans are entered into, paid off,
refinanced, or otherwise terminated, Exhibit A shall be amended by the Members
so that it continues to reflect a current list of all Loans.
1.1.30 "Major Decision" and "Major Decisions" shall have the meanings
set forth in Section 7.3.
1.1.31 "Member" means each party executing this Agreement and their
successors and assigns who are admitted pursuant to the terms of this Agreement.
1.1.32 "Membership Interests" means all rights and interests of the
Members of the Company including, without limitation, the right to participate
in the management of the Company to the extent expressly provided in this
Agreement. Immediately after the distribution described in Section 5.1 of this
Agreement and the contribution of the Prime Contributed Assets, the respective
Membership Interests of the Members shall be:
UST 70%
Prime 30%
1.1.33 "Net Sale or Refinancing Proceeds" shall mean the net proceeds
remaining from any Capital Transaction after providing for the payment of all
costs and expenses related thereto, the payment for any capital expenditures or
expenses for which such proceeds are to be used, the satisfaction of any debt,
the funding of any required escrows and reserves, and the setting aside of any
reserves for creditors as determined jointly by UST and Prime.
1.1.34 "Operating Capital" shall have the meaning set forth in Section
4.2.1.
1.1.35 "Person" means an individual, corporation, limited liability
company, general partnership, limited partnership, voluntary association, joint
stock company, business trust, joint venture, proprietorship, or other legal
entity, however constituted.
1.1.36 "Prime Assumed Obligations" shall have the meaning set forth in
Section 7.5.
1.1.37 "Prime Capital Transaction Priority Return" means, for the
Company fiscal year in which a Capital Transaction described in Section 5.3
occurs, a ten percent (10%) preferred simple return (i.e., not compounded or
cumulative) on the Prime Invested Capital for such fiscal year, prorated for
partial fiscal years.
1.1.38 "Prime Combined Priority Return" means the sum of the Prime
Capital Transaction Priority Return and the Prime Priority Return.
1.1.39 "Prime Dearborn" means Prime Dearborn, L.L.C., a Delaware
limited liability company.
1.1.40 "Prime Contributed Assets" means all assets (including, without
limitation, cash contributions) contributed or deemed contributed by Prime to
the Company pursuant to the Contribution Agreement including, without
limitation, the Property.
1.1.41 "Prime Invested Capital" means the total amount of Prime's
Initial Invested Capital and Required Additional Invested Capital (at the time
the relevant distribution or determination is made), less any prior
distributions of the net proceeds of Capital Transactions made to Prime at the
time such distribution or determination is made by the Company, but not reduced
by the distributions to Prime contemplated by the first sentence of Section 5.1
below.
1.1.42 "Prime Option Period" shall have the meaning set forth in
Section 11.1.1.
1.1.43 "Prime Purchase Option" shall have the meaning set forth in
Section 11.1.
1.1.44 "Prime Priority Return" means an annual, simple (i.e., not
compounded or cumulative), ten percent (10%) preferred return on the Prime
Invested Capital determined at the time the relevant distribution is made,
prorated for partial fiscal years.
1.1.45 "Proceeds Advance" means a payment by UST or the Company, as the
case may be, of any portion of the Proceeds (as defined in the Bank One Lease)
due and payable by Prime to Bank One in connection with the Bank One Rights.
Neither UST nor the Company shall have the right to make a Proceeds Advance
unless and until Prime fails to pay the Proceeds (or applicable portion thereof)
to Bank One in accordance with the terms and conditions of the Bank One Lease.
1.1.46 "Profits" and "Losses" and reference to any item of income,
gain, loss or deduction thereof mean, for each Company fiscal year, an amount
equal to the Company's taxable income or loss for such Company fiscal year,
determined in accordance with Code Section 703(a) (but including in taxable
income or loss, for this purpose, all items of income, gain, loss or deduction
required to be stated separately pursuant to Code Section 702(a)), with the
following adjustments:
i. any income of the Company exempt from Federal income tax and
not otherwise taken into account in computing Profits or
Losses pursuant to this definition shall be added to such
taxable income or loss;
ii. any expenditures of the Company described in Code Section
705(a)(2)(B) (or treated as expenditures described in Code
Section 705(a)(2)(B) pursuant to Regulations Section
1.704-1(b)(2)(iv)(i)) and not otherwise taken into account in
computing Profits or Losses pursuant to this definition shall
be subtracted from such taxable income or loss;
iii. in the event the gross fair market value of any Company asset
is adjusted in accordance with the Regulations, the amount of
such adjustment shall be taken into account as gain or loss
from the disposition of such asset for purposes of computing
Profits or Losses;
iv. gain or loss resulting from any disposition of any asset of
the Company with respect to which gain or loss is recognized
for Federal income tax purposes shall be computed by reference
to the gross fair market value of the asset disposed of,
notwithstanding that the adjusted tax basis of such asset
differs from its gross fair market value;
v. in lieu of the depreciation, amortization and other cost
recovery deductions taken into account in computing such
taxable income or loss, there shall be taken into account
Depreciation for such Company fiscal year or other period;
vi. to the extent an adjustment to the adjusted tax basis of any
Property is required pursuant to Regulations Section 1.
704-1(b)(2)(iv)(m)(4) to be taken into account in determining
Capital Accounts, the amount of such adjustment shall be
treated either as an item of gain (if the adjustment increases
the basis of the asset) or an item of loss (if the adjustment
decreases the basis of the asset) in respect of such asset and
shall be taken into account for purposes of computing Profits
and Losses; and
vii. notwithstanding any other provision of this definition of
"Profits" and "Losses," any items which are specially
allocated pursuant to Section 6.5 hereof shall not be taken
into account.
1.1.47 "Pro Forma Net Operating Income" means, for the period in
question, the amount by which Projected Gross Receipts exceed Projected
Operating Expenses.
1.1.48 "Projected Gross Receipts" means, for the period in question, an
amount equal to the total gross cash revenues projected for the Company for such
period, including (a) the total amount payable by all tenants, licensees,
concessionaires and others occupying any portion of the Property including, but
not limited to, all rents, pro rata shares of taxes, common area charges and
other additional rental charges under Current Leases, less an allowance for
uncollectibles of 1.5% of the annual rent under all Current Leases with tenants
that do not have an investment grade credit rating; and (b) parking fees,
service income, income under the City Agreement, utility and telephone service
fees. With respect to the rents projected to be received under Current Leases,
(i) all rent allowances and concessions payable to tenants shall be counted as
paid, and (ii) the projected rent payable under any Current Lease for any
partial year shall be annualized.
1.1.49 "Projected Operating Expenses" means, for the period in
question, an amount equal to the sum of all cash operating expenses projected to
be expended by the Company for such period including, without limitation, for
(a) utilities, (b) maintenance and repairs, (c) administrative costs (excluding
the UST Administrative Fee and administrative costs not associated with the
operation of the Property, such as Company accounting and tax preparation fees),
(d) management fees, (e) cleaning, (f) security, (g) insurance and (h) real
estate taxes, personal property taxes and sales taxes. Project Expenses shall be
calculated without any deductions for debt service (including interest),
depreciation, amortization or other non-cash expenses and any capitalized
expenditure (as determined in accordance with generally accepted accounting
principles).
1.1.50 "Property" means the thirty-seven story office building located
at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ in Chicago, Illinois and containing approximately
1,536,751 rentable square feet of space, consisting of approximately 1,441,402
rentable square feet of office space, 95,349 rentable square feet of retail
space and approximately 190 parking spaces located in an underground parking
garage. In addition, there is approximately 24,218 square feet of lower level
storage space.
1.1.51 "Property Management and Leasing Agreement" means the agreement
in the form attached as Exhibit II to the Contribution Agreement.
1.1.52 "Property Manager" means Prime Group Realty Services, Inc., a
Maryland corporation.
1.1.53 "Protected REIT" means Prime Group Realty Trust, a Maryland real
estate investment trust.
1.1.54 "Regulations" mean the temporary and final income tax
regulations promulgated under the Code from time to time.
1.1.55 "REIT" means a real estate investment trust.
1.1.56 "Required Additional Invested Capital" means (a) with respect to
UST, the $9,800,000 ▇▇▇▇ Earnout (as defined in the Contribution Agreement),
which UST shall be required to contribute to the Company as an additional
contribution of Invested Capital upon satisfaction of the Leasing Condition; and
(b) with respect to Prime, the $4,200,000 PGRLP Earnout (as defined in the
Contribution Agreement), which shall be treated as an additional contribution of
Invested Capital by Prime to the Company upon satisfaction of the Leasing
Condition.
1.1.57 "Sharing Capital Ratios" means the percentages in which Members
participate in, and bear, certain Company items. The Sharing Capital Ratios of
the Members are as follows:
UST 50%
Prime 50%
1.1.58 "Syndication" shall have the meaning set forth in Section 8.2.
1.1.59 "Transferee" shall have the meaning set forth in Section 9.1.
1.1.60 "Transferor" shall have the meaning set forth in Section 9.1.
1.1.61 "Uniform Commercial Code" shall mean the Uniform Commercial Code
of the State of Delaware, as the same may be amended from time to time.
1.1.62 "UST Administrative Fee" means the monthly $50,000 fee payable
to UST by the Company for the performance of its services as Administrative
Member. The UST Administrative Fee will have priority over distributions to be
made to the Members under this Agreement and shall be paid on a pari passu basis
with management fees and leasing commissions due to the Property Manager under
the Property Management and Leasing Agreement, but shall not have priority over
any other payments and reimbursements due under the Property Management and
Leasing Agreement including, without limitation, leasing commissions payable to
cooperating brokers.
1.1.63 "UST Capital Transaction Priority Return" means, for the Company
fiscal year in which a Capital Transaction described in Section 5.3 occurs, a
ten percent (10%) preferred simple return (i.e., not compounded or cumulative)
on the UST Invested Capital for such fiscal year, prorated for partial fiscal
years.
1.1.64 "UST Combined Priority Return" means the sum of the UST Capital
Transaction Priority Return and the UST Priority Return.
1.1.65 "UST Contributed Assets" means the cash contributed by UST to
the Company pursuant to the Contribution Agreement.
1.1.66 "UST Invested Capital" means the aggregate amount of UST's
Initial Invested Capital and UST's Required Additional Invested Capital (at the
time the relevant distribution or determination is made), less any prior
distributions of the proceeds of Capital Transactions made to UST at the time of
such distribution or determination is made by the Company.
1.1.67 "UST Priority Return" means an annual, simple (i.e., not
compounded or cumulative), ten percent (10%) preferred return on the UST
Invested Capital determined at the time the relevant distribution is made,
prorated for partial fiscal years.
1.1.68 "UST Option Period" shall have the meaning set forth in Section
11.2.1.
1.1.69 "UST Purchase Option" shall have the meaning set forth in
Section 11.2.
1.1.70 "▇▇▇▇" means ▇▇▇▇ Chicago, L.C., a Florida limited liability
company.
ARTICLE II
FORMATION
Section 2.1 Formation of Company. The Company was formed as a limited
liability company pursuant to the Act, effective September 27, 2000. In
connection with the transactions contemplated by the Contribution Agreement,
Prime Dearborn has distributed all of its Membership Interests in the Company to
Prime and confirmed Prime as a Member of the Company and withdrawn as a Member
of the Company. Prime, as the sole Member of the Company as a result of the
distribution by Prime Dearborn, now desires to admit UST as a Member and to
confirm, amend and restate the Agreement in its entirety. The rights,
privileges, liabilities and obligations of the Members shall be as provided in
the Act, except as herein expressly stated to the contrary in this Agreement.
Section 2.2 Name of Company. The name of the Company shall be Dearborn
Center, L.L.C. In the future, the Administrative Member shall execute such
further documents (including amendments to the articles of organization) and
take such further action as shall be appropriate or necessary to comply with the
requirements of law for the formation and operation of a limited liability
company in all states and counties where the Company elects to carry on its
business.
Section 2.3 Purposes and Objectives. The purposes of the Company shall
be to engage primarily in the ownership, leasing and operation of the Property
in accordance with the terms and provisions of this Agreement and to engage in
such other activities as may be related, incident or ancillary thereto.
Section 2.4 Term. The Company shall commence as of the date hereof and
continue in existence in perpetuity, or until terminated in accordance with the
terms of this Agreement.
Section 2.5 Principal place of Business. The principal place of
business of the Company shall be at the office of the Administrative Member at
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ or such other location where
the Administrative Member's principal office shall be located from time to time.
The Administrative Member shall give reasonable prior written notice of any
change in such principal place of business to the Members. The name and address
of the registered agent in Delaware is Corporation Trust Company, ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The name and address of
the registered agent of the Company in Illinois is Prime Group Realty, L.P. c/o
Prime Group Realty Trust, ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: General Counsel. Prime shall promptly send a copy of any
notice received by Prime in its capacity as registered agent of the Company in
Illinois to the other Members of the Company.
ARTICLE III
REPRESENTATIONS, WARRANTIES, AND ACKNOWLEDGMENTS
Section 3.1 Representations of the Members. Each Member represents and
warrants to the other:
3.1.1 Due Organization. Such Member is duly organized, validly existing
and in good standing under the laws of the state of its organization and has the
requisite power and authority (a) to carry on its business as presently
conducted and to own or hold under lease its properties, where the failure to
have such power and authority would have a material adverse effect on its
ability to perform its obligations under this Agreement, and (b) to enter into
and perform its obligations under this Agreement.
3.1.2 Authorization. The execution, delivery and performance by such
Member of this Agreement have been duly authorized by all necessary action on
the part of such Member. This Agreement has been duly authorized, executed and
delivered by such Member and is a legal, valid and binding obligation of such
Member, enforceable against such Member in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, liquidation, moratorium or similar laws affecting creditors' or
lessors' rights generally and except as the application of general equitable
principles may limit the availability of certain remedies.
Section 3.2 Effect of this Agreement. Neither the execution and
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby nor compliance by such Member with any of the provisions
hereof, will: (a) conflict with or result in a breach of any provision of the
constituent documents of such Member; (b) require the approval or consent of, or
filing or registration with, any foreign, Federal, state, local or other
governmental or regulatory body or the approval or consent of any other Person
the failure of which to make or obtain would have a material adverse effect on
the ability of such Member to perform its obligations under this Agreement; (c)
violate any provision of any law or regulation or violate, breach or, with the
giving of notice or passage of time, constitute an event of default (or give
rise to any right of termination, cancellation or acceleration) under any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, license,
agreement or other instrument or obligation to which such Member is a party, or
by which it may be bound, which violation, breach or default (or right of
termination, cancellation or acceleration) would have a material adverse effect
on the ability of such Member to perform its obligations under this Agreement
and the transactions contemplated hereby except, in the case of clause (c), as
to which requisite waivers or consents have been obtained.
Section 3.3 Litigation. There is no action, suit or proceeding pending
or, to the knowledge of such Member, threatened against such Member or any of
its Affiliates which, if adversely determined could, individually or in the
aggregate, reasonably be expected to materially and adversely affect such
Member's authority to enter into this Agreement or the enforceability of this
Agreement with respect to such Member.
ARTICLE IV
CAPITAL CONTRIBUTIONS
Section 4.1 Capital Account.
4.1.1 Establishment of Capital Accounts. A capital account (the
"Capital Account") shall be established and maintained for each Member. The
Capital Account of each Member shall be (a) credited with any income of the
Company allocated to such Member pursuant to the terms of this Agreement and the
amount of cash and net fair market value (as set forth in Section 4.2 for the
Capital Contributions and as mutually agreed by Prime and UST in writing for any
subsequent Capital Contributions) of any property contributed by such Member
under this Agreement; (b) debited with the amount of cash and the net fair
market value (as reasonably determined by Prime and UST in writing) of any
property distributed to such Member by the Company (including without limitation
the distributions to Prime described in Section 5.1 hereto) and with any
deductions, losses and expenditures of the Company allocated to such Member
pursuant to the terms of this Agreement, and (c) otherwise kept in conformance
with Regulations Sections 1.704-1(b) and 1.704-2.
Section 4.2 Capital Contributions. The Members shall make the following
Capital Contributions to the Company:
4.2.1 Members' Capital Contributions.
(a) Prime has contributed to the Company on the date hereof (i) all of
its right, title and interest in and to the Prime Contributed Assets, and (ii)
$600,000 in cash to the capital of the Company, representing Prime's share of
the $2,000,000 capital contribution required by Section 8.3 of the Contribution
Agreement and further described in Section 4.2.1(c) below. Prime has been
credited with a total Capital Contribution equal to $49,800,000, as such amount
may be adjusted in accordance with the Contribution Agreement and this
Agreement, such amount representing the net fair market value of the Prime
Contributed Assets including, without limitation, the PGRLP Earnout, after the
distribution to Prime contemplated by the first sentence of Section 5.1 of this
Agreement.
(b) UST has contributed to the Company on the date hereof (i) the UST
Contributed Assets, and (ii) $1,400,000 in cash to the capital of the Company,
representing UST's share of the $2,000,000 capital contribution required under
Section 8.3 of the Contribution Agreement and further described in Section
4.2.1(c) below. UST has been credited with a total Capital Contribution equal to
$116,200,000, as such amount may be adjusted in accordance with the Contribution
Agreement and this Agreement, such amount representing the $1,400,000 cash
contribution plus the amount of the UST Contributed Assets as of the date of
this Agreement which shall include, for this purpose, UST's obligation to make
the contribution of Required Additional Invested Capital pursuant to Section
4.3(b) below. This Capital Contribution is being made in accordance with the
terms and provisions of the Contribution Agreement.
(c) In connection with the transactions contemplated by the
Contribution Agreement and the execution and delivery of the Loan Documents, UST
and Prime each have contributed their respective shares (70% for UST and 30% for
Prime) of a $2,000,000 capital contribution to the Company required by Section
8.3 of the Contribution Agreement to pay for closing costs and adjustments
payable in connection with the Loan Documents and the establishment of a reserve
for operating capital of the Company (the "Operating Capital"), and such cash
contributions shall constitute Capital Contributions under this Agreement. The
Members agree that the Operating Capital will not be considered as Distributable
Cash under this Agreement and will be disbursed to the Members, if at all, only
in connection with a Capital Transaction.
4.2.2 Other Contributions. If additional capital is required by the
Company as determined by the unanimous vote of Members, the Members shall make
such additional capital contributions (the "Additional Capital Contribution") in
the following proportions: 70% by UST and 30% by Prime.
Section 4.3 Contributions of Invested Capital. Prime and UST shall be
required to make or be deemed to have made the following contributions of
Invested Capital:
(a) On the date of this Agreement, (i) UST shall be credited with an
initial contribution of Invested Capital in the amount of $106,400,000
representing ESA's initial cash contributions to the Company including the
contribution required by Section 8.3 of the Contribution Agreement, and (ii)
Prime shall be credited with an initial contribution of Invested Capital in the
amount of $45,600,000, representing a portion of net fair market value of the
Prime Contributed Assets after the distribution to Prime contemplated by the
first sentence of Section 5.1 of this Agreement and the capital contribution
required by Section 8.3 of the Contribution Agreement.
(b) On or before the later of five (5) business days after the
satisfaction of the leasing conditions contained in Section 1.17 of the
Contribution Agreement (the "Leasing Condition") and thirty (30) days notice to
UST, UST shall contribute cash to the Company in the amount of the UST Required
Additional Invested Capital, the UST Required Additional Invested Capital
Contribution shall be immediately distributed to Prime without any reduction in
Prime's Invested Capital and UST shall be credited with an additional
contribution to Invested Capital equal to $9,800,000.
(c) Upon satisfaction of the Leasing Condition, Prime, in recognition
of the contributions of the Prime Contributed Assets and the satisfaction of the
Leasing Condition will be credited with an additional contribution to Invested
Capital of $4,200,000, such amount representing the net fair market value of the
contributions of the Prime Contributed Assets associated with the satisfaction
of the Leasing Condition.
(d) If the Leasing Condition is satisfied and UST fails to contribute
its Required Additional Invested Capital, then (i) UST's Capital Account shall
be reduced by $9,800,000 until UST makes or is deemed to have made the
contribution of Required Additional Invested Capital, (ii) the UST
Administrative Fee shall be paid to Prime until such time as the full amount of
the Required Additional Invested Capital (inclusive of such payments) is
contributed or deemed contributed by UST, and/or (iii) Prime may seek to enforce
its rights under the Earnout Guarantee (as defined in the Contribution
Agreement). If Prime exercises its rights under the Earnout Guarantee and Estein
& Associates, Ltd. pays to Prime the UST Required Additional Invested Capital,
then UST shall be credited with an additional contribution to its Invested
Capital in the amount of $9,800,000 at the time of such payment.
Section 4.4 Return of Capital. Except as expressly provided in this
Agreement, no Member shall have any personal liability for the repayment of the
Capital Contributions of any Member. No Member shall be entitled to the
withdrawal or return of its Capital Contributions except to the extent, if any,
that distributions made pursuant to this Agreement or upon the winding up of the
Company may be considered as such by operation of law, and then only to the
extent provided for in this Agreement. Except as set forth in Article V, no
Member shall have priority over any other Member either as to the return of
capital or as to profits, losses or distributions or be entitled to receive any
interest on its Capital Contributions or to receive or demand any property from
the Company other than cash.
ARTICLE V
ALLOCATIONS AND DISTRIBUTIONS
Section 5.1 Cash Distribution. The Company has distributed $105,000,000
to Prime or its assignee pursuant to this Agreement and the Company will
distribute an amount equal to the UST Required Additional Invested Capital to
Prime pursuant to this Agreement without reduction in Prime's Invested Capital.
All subsequent distributions shall be made from cash of the Company remaining
after repayment of all amounts then due and payable pursuant to the Loan
Documents and other expenses, liabilities of the Company then due and payable
including, without limitation, amounts payable under the Property Management and
Leasing Agreement and the UST Administrative Fee, and after establishment of
such reserves as the Administrative Member may reasonably determine for specific
anticipated purposes (the "Distributable Cash"). In addition to amounts excluded
from Distributable Cash by the Company pursuant to the preceding sentence,
Distributable Cash shall exclude security and other deposits under leases,
advance payments of rent not due and payable for the period in question, amounts
payable by tenants under leases but payable by the Company to third parties
including, without limitation tax and operating expense reimbursements,
management fees, the UST Administrative Fee, amounts necessary to fund debt
service in the Loan for the period in question and capital expenditures
contemplated by the Annual Capital Plan for the applicable fiscal year. During
the existence of the Company, no Member shall be entitled to receive as
distributions from the Company any asset of the Company other than cash.
Section 5.2 Distributions of Distributable Cash. The Administrative
Member shall distribute or cause to be distributed all Distributable Cash as of
each Distribution Date as follows:
5.2.1 first, on a monthly basis, to UST until the distributions to UST
for the current Company fiscal year pursuant to this Section 5.2.1 equals the
UST Priority Return for such fiscal year;
5.2.2 next, to Prime until the distributions to Prime for the current
Company fiscal year pursuant to this Section 5.2.2 equals the Prime Priority
Return for such fiscal year (this distribution also will be made monthly if the
Administrative Member reasonably determines that there will be sufficient funds
available for the balance of such fiscal year so that Prime will be entitled to
the portion of the Prime Priority Return then being distributed); and
5.2.3 next, the balance, if any, shall be distributed to the Members
after the financial statements for such fiscal year have been audited, pro rata,
in accordance with their Sharing Capital Ratios.
Section 5.3 Net Sale or Refinancing Proceeds. Except as otherwise
provided herein or upon dissolution and termination of the Company under Article
X, the Administrative Member shall cause the Company to distribute all Net Sale
or Refinancing Proceeds not later than five (5) business days after the closing
date of the Capital Transaction(s) giving rise to such proceeds to the Members
in the following order and priority:
5.3.1 First, to UST until the distributions to UST under this Section
5.3.1 for the Company fiscal year in which the Capital Transaction occurs equals
the UST Capital Transaction Priority Return for such fiscal year;
5.3.2 next, to UST until the UST Invested Capital as of the date of the
Capital Transaction has been reduced to zero;
5.3.3 next, to Prime until the distributions to Prime under this
Section 5.3.3 for the Company fiscal year in which the Capital Transaction
occurs equals the Prime Capital Transaction Priority Return for such fiscal
year;
5.3.4 next, to Prime until the Prime Invested Capital as of the date of
the Capital Transaction has been reduced to zero;
5.3.5 next, the balance, if any shall be distributed to the Members,
pro rata in accordance with their Sharing Capital Ratios; and
5.3.6 Notwithstanding anything to the contrary contained in this
Section 5.3:
(a) if UST fails to contribute all or any portion of the UST Required
Additional Invested Capital, then all amounts to be distributed to UST under
this Section 5.3 shall be deemed distributed to UST, but shall be paid to Prime
until such time as Prime has received the full $9,800,000 distribution required
by Section 4.3(b) of this Agreement from any source contemplated by Section
4.3(b) and (d) of this Agreement, and UST shall receive a credit to its Capital
Account and a credit to its Invested Capital with respect to all amounts paid to
Prime from any such source (up to $9,800,000);
(b) if UST makes a Proceeds Advance, then all amounts to be distributed
to Prime under this Section 5.3 shall be deemed distributed to Prime under this
Section 5.3, but shall be paid to UST until such time as UST has received the
full amount of the Proceeds Advance; and
(c) if the Company makes a Proceeds Advance, then all amounts to be
distributed to Prime under this Section shall be deemed distributed to Prime
under this Section 5.3 before any other distribution to Prime, but shall be
retained by the Company and then will be redistributed by the Company in
accordance with this Section 5.3.
Section 5.4 Allocations of Profit. Except as otherwise provided herein,
Profits of the Company shall be allocated for Federal income tax purposes in the
following order of priority:
5.4.1 First, to the Members in proportion to the cumulative Losses
previously allocated to each Member pursuant to Section 5.5.4 until the
cumulative Profit allocated pursuant to this Section 5.4.1 equals the cumulative
Losses allocated to such Members under Section 5.5.4 for all prior Company
fiscal years;
5.4.2 Second, to UST and Prime in proportion to the UST Combined
Priority Return and Prime Combined Priority Return, as applicable, until the
cumulative Profit allocated to each pursuant to this Section 5.4.2 for all
Company fiscal years is equal to the UST Combined Priority Return and Prime
Combined Priority Return, respectively, for all Company fiscal years;
5.4.3 Third, to UST, until the Profit allocated pursuant to this
Section 5.4.3 equals the cumulative Losses allocated to UST pursuant to Section
5.5.3 for all Company fiscal years; provided, however, any Losses allocated
pursuant to this Section 5.4.3 for any fiscal year shall not exceed the UST
Invested Capital at the end of such fiscal year;
5.4.4 Fourth, to Prime, until the Profit allocated pursuant to this
Section 5.4.4 equals the cumulative Losses allocated to Prime pursuant to
Section 5.5.2 for all Company fiscal years; provided, however, any Losses
allocated pursuant to this Section 5.4.4 for any fiscal year shall not exceed
the Prime Invested Capital at the end of such fiscal year; and
5.4.5 The balance to each Member, pro rata, in accordance with such
Member's Sharing Capital Ratio.
Section 5.5 Losses. Except as otherwise provided herein, Losses of the
Company shall be allocated for Federal income tax purposes in the following
order:
5.5.1 First, to each Member in accordance with such Member's Sharing
Capital Ratio until the cumulative Losses allocated to such Member pursuant to
this Section 5.5.1 for all Company fiscal years equals the cumulative Profits
allocated to such Member pursuant to Section 5.4.5 for all Company fiscal years;
5.5.2 Second, to Prime, until the Prime Invested Capital is reduced to
zero;
5.5.3 Third, to UST, until the UST Invested Capital is reduced to zero;
and
5.5.4 The balance to each Member, pro rata, in accordance with such
Member's Sharing Capital Ratio.
ARTICLE VI
ACCOUNTING, TAXATION, AND OTHER MATTERS
Section 6.1 Company Fiscal Year. The fiscal year of the Company shall
be the calendar year.
Section 6.2 Location of Records; Inspection. The books, records and
accounts for the Company shall be kept and maintained at such location as the
Administrative Member shall determine. Each Member, at its own expense and upon
reasonable notice, shall have the right and power to examine and inspect, or
cause to be examined and inspected, at any and all reasonable times, the books,
records and accounts of the Company and any tax returns prepared for the Company
prior to the filing thereof.
Section 6.3 Books of Account. The books of account for the Company
shall be maintained by the Administrative Member on an accrual basis in
accordance with generally acceptable accounting principles.
Section 6.4 Reports. As soon as practicable following the end of each
Company fiscal year and in any event within the time specified below, the
Administrative Member shall cause to be prepared on an accrual basis and
delivered to each Member:
6.4.1 As soon as practical but in no event later than one hundred
twenty (120) days following the end of such Company fiscal year a report
containing audited financial statements of the Company including a balance
sheet, income statement and Statement of Member's Equity prepared in accordance
with generally accepted accounting principles, which shall include a statement
of each Member's Capital Account and each Member's Invested Capital Account. The
costs of such reports shall be paid by the Company.
6.4.2 As soon as practical but in no event later than one hundred
twenty (120) days following the end of such Company fiscal year (or such later
time as the Administrative Member shall permit), a report containing information
regarding changes to the Capital Account of each Member during such Company
fiscal year, including (a) the amount of Capital Contributions credited to each
Member's Capital Account during such Company fiscal year, (b) any distributions
received by a Member during such Company fiscal year under this Agreement, and
(c) any items, such as Profits or Losses from the Company's activities,
allocated to each Member's Capital Account during such Company fiscal year. The
foregoing information may be delivered to the Members in the form of a Form
1065, Schedule K-1 and any attachments thereto.
6.4.3 The Administrative Member also shall cause to be prepared and
delivered to Prime such monthly, quarterly and annual reports and returns for
the Company, which shall include such information as may be reasonably necessary
for any of the Members to prepare and file on a timely basis any monthly,
quarterly or annual reports or returns required to be filed by the applicable
Member with the Securities and Exchange Commission, the Internal Revenue Service
or other governmental bodies and such other reports and information as either
Member shall reasonably request or as are required by the Property Management
and Leasing Agreement. In the case of Prime, such reports shall include all
information reasonably required by Prime to enable the Protected REIT to
determine that it has satisfied all applicable requirements relating to REITs
generally or the Protected REIT specifically. Further details regarding the
reports and information to be provided shall be contained in the Property
Management and Leasing Agreement. If the Property Management and Leasing
Agreement is terminated, any replacement agreement will contain the reporting
requirements included in the Property Management and Leasing Agreement.
Notwithstanding the foregoing, so long as an Affiliate of Prime is the Property
Manager and is performing reporting and accounting services pursuant to the
Property Management and Leasing Agreement, the Administrative Member shall not
be deemed liable for failing to deliver such reports and returns in a timely
fashion if the delay in delivering the applicable report or return is due to a
delay caused by the Property Manager.
Section 6.5 Taxation.
6.5.1 The Company shall be a partnership for Federal, state and local
income and other tax purposes. The Members agree to cooperate in the taking of
all actions, including the amendment of this Agreement and the execution of
other documents, if required, to qualify for and receive such tax treatment.
6.5.2 The Members agree and intend that the payments to Prime or its
assignee described in the first sentence of Section 5.1 are a reimbursement by
the Company of preformation expenditures of Prime and shall be treated as a
distribution to Prime for income tax purposes as provided in Treasury Regulation
Section 1.707-4(d).
6.5.3 Notwithstanding the provisions of Section 5.3:
(a) If there is a net decrease in "partnership minimum gain" (within
the meaning of Regulations Section 1.704-2(d)) for a Company fiscal year (except
as a result of conversion or refinancing of indebtedness of the Company, certain
capital contributions or revaluation of the Company's property as further
outlined in Regulations Sections 1.704-2(d)(4), (f)(2) or (f)(3)), then, there
shall be allocated to each member items of income and gain for that year (and,
if necessary, for succeeding years) equal to that Member's share of the net
decrease in minimum gain (within the meaning of Regulations Section
1.704-2(g)(2)). The foregoing is intended to be a "minimum gain chargeback"
provision as described in Regulations Section 1.704-2(f) and shall be
interpreted and applied in all respects in accordance with that Regulations
Section.
(b) If there is a net decrease in partner nonrecourse debt minimum gain
(as determined in accordance with Regulations Section 1.704-2(i)(3) for a
Company fiscal year (other than due to the conversion, refinancing or other
change in the debt instrument causing it to become partially or wholly
nonrecourse, certain capital contributions, or certain revaluations of property
of the Company as further outlined in Regulations Section 1.704-2(i))4)), then,
in addition to the amounts, if any, allocated pursuant to the preceding
paragraph, any Member with a share of that partner nonrecourse debt minimum gain
(determined in accordance with Regulations Section 1.704-2(i)(5)) as of the
beginning of the Company fiscal year shall be allocated items of income and gain
for that year (and, if necessary, for succeeding years) equal to that, Member's
share of the net decrease in such partner nonrecourse minimum gain. The
foregoing is intended to be a "chargeback of partner nonrecourse debt minimum
gain" as required by Regulations Section 1.704-2(i)(4) and shall be interpreted
and applied in all respects in accordance with such Regulations Section.
(c) If during any Company fiscal year of the Company a Member
unexpectedly receives an adjustment, allocation or distribution described in
Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5), or (6), which causes or
increases a deficit balance in the Member's Capital Account in excess of that
which the Member is obligated to restore or deemed obligated to restore pursuant
to the penultimate sentence of Regulation Sections 1.704-2(g) and 1.704-2(i),
there shall be allocated to such Member items of income and gain (consisting of
a pro rata portion of each item of Company income, including gross income, and
gain for such year) in an amount and manner sufficient to eliminate such deficit
balance as quickly as possible. The foregoing is intended to be a "qualified
income offset" provision as described in Regulations Section
1.704-1(b)(2)(ii)(d), and shall be interpreted and applied in all respects in
accordance with such Regulations Section.
(d) If the allocation of any item of loss or deduction for any Company
fiscal year would cause or increase a deficit balance in the Capital Account of
any Member as of the end of such Company fiscal year in excess of that which the
Member is obligated to restore or deemed obligated to restore pursuant to the
penultimate sentence of Regulation Sections 1.704-2(g) and 1.704-2(i), then, to
the extent the allocation of such item of loss or deduction would have such
effect, it shall instead be allocated (a) first, to the other Member to the
extent that such allocation reduces such other Member's Capital Account to zero,
and (b) thereafter, in accordance with Section 5.5.4. For purposes of this
paragraph (d), a Member's Capital Account shall not be reduced for items listed
in Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6) for purposes of
determining whether the allocation of any item of loss or deduction for a
Company fiscal year would cause or increase a deficit balance in the Capital
Account of any Member as of the end of such Company fiscal year, and (ii) the
amount of items of loss or deduction that can be specially allocated pursuant to
this paragraph (d) to the other Member without reducing such other Member's
Capital Account below zero.
(e) Notwithstanding anything to the contrary in this Section 6.5.3, any
item of deduction, loss, or Code Section 705(a)(2)(B) expenditure that is
attributable to "partner nonrecourse debt" shall be allocated in accordance with
the manner in which the Members bear the economic risk of loss for such debt
(determined in accordance with Regulations Section 1.704-2(i)).
(f) Beginning in the first fiscal year in which there are allocations
of "nonrecourse deductions" (as described in Section 1.704-2(b) of the
Regulations) and throughout the full term of the Company such deductions shall
be allocated to the Members as part of the Profit or Losses allocated for such
period.
(g) All recapture of income tax deductions resulting from the sale or
disposition of Company property shall be allocated to the Member or Members to
whom the deduction that gave rise to such recapture was allocated hereunder to
the extent that such Member is allocated any gain from the sale or other
disposition of such property.
(h) Any credit or charge to the Capital Account of a Member pursuant to
paragraphs (a), (b), (c), (d), (e) or (f) of this Section 6.5.3 shall be taken
into account by computing subsequent allocations of Profits and Losses, so that
the net amount of any items charged or credited to Capital Accounts pursuant to
Sections 5.4 and 5.5 and pursuant to paragraphs (a), (b), (c), (d), (e) and (f)
of this Section 6.5.3 shall, to the extent possible, be equal to the net amount
that would have been allocated to the Capital Account of each Member pursuant to
the provisions of Sections 5.4 and 5.5 if the special allocations required by
paragraphs (a), (b), (c), (d), (e) and (f) of this Section 6.5.3 had not
occurred.
(i) In accordance with Section 704 (c) of the Code and the applicable
Regulations thereunder, income, gain, loss, deduction and tax depreciation with
respect to any property contributed to capital of the Company, or with respect
to any property which has a book basis different than its adjusted tax basis,
shall, solely for Federal income tax purposes be allocated between the Members
so as to take into account any variation between the adjusted tax basis of such
property to the Company and the book basis of such property using the
"traditional method with curative allocations" as described in Regulations
Sections 1.704-3(b) and (c). All items of Company income, gain, loss, deduction
and any other allocation otherwise provided for shall be divided between the
Members in the same priority in proportion as they share gain, income, or loss,
as the case may be for such year.
(j) The Members agree that liabilities for purposes of Code Section 752
shall be allocated among the Members in proportion to the Members' Sharing
Capital Ratios.
Section 6.6 Tax Returns and Audits. The Administrative Member shall
prepare or cause to be prepared and timely file (after giving effect to all
extension periods) all Federal, state and local income and other tax returns and
reports as may be required as a result of the business of the Company. Not less
than fifteen (15) business days prior to the date (as extended) on which the
Company intends to file its Federal income tax return or any state income tax
return, the return proposed to be filed by the Administrative Member shall be
furnished to Prime for its review and written approval. In addition, not more
than ten (10) days after the date on which the Company actually files its
Federal income tax return or any state income tax return, a copy of the return
so filed by the Administrative Member shall be furnished to the Members. The
Members agree that an election under Code Section 754 shall be filed with the
first Federal income tax return of the Company. The Administrative Member is
hereby designated the tax matters partner under Section 6231 of the Code. The
Administrative Member shall promptly notify the Members if any tax return or
report of the Company is audited or if any adjustments are proposed by any
governmental body. In addition, the Administrative Member shall promptly furnish
to the Members periodic reports, not less often than quarterly, concerning the
status of any such proceeding and shall deliver to each of the Members copies of
any and all correspondence, notices or other information received by the
Administrative Member or the Company from any governmental body. Without the
written consent of all of the Members, the tax matters partner, in its capacity
as such, shall not (a) extend the period to file any Federal, state or local
income or other tax returns or reports, extend the statute of limitations, file
a request for administrative adjustment, file suit concerning any tax refund or
deficiency relating to any Company administrative adjustment or enter into any
settlement agreement relating to any Company item of income, gain, loss,
deduction or credit for any Company fiscal year of the Company, and/or (b) take
any position in any Federal, state or local tax return or report that could
adversely affect the status of the Protected REIT as a REIT or take a reporting
position that would cause any of the income of the Company to not be treated as
qualifying income under Code Section 856(c).
Section 6.7 Other Reports. The Administrative Member shall prepare and
file, or cause to be prepared and filed, all reports prescribed by any other
commission or governmental agency having jurisdiction over the business or
properties of the Company or required by the Loan Documents, the costs of which
shall be paid by the Company.
Section 6.8 Bank Accounts; Investments.
(a) The Administrative Member shall cause the Company to open and
maintain bank accounts, money market accounts and other accounts at banks and
financial institutions selected by the Administrative Member, acting reasonably
(the "Company Accounts"). All funds of every kind and nature received by the
Company, including Capital Contributions, loan proceeds and operating receipts,
shall be deposited in the Company Accounts. The Administrative Member shall give
the Members written notification of the banks at which the Company Accounts are
maintained. Signatories for the Company Accounts shall be authorized from time
to time in writing by the Administrative Member acting reasonably and shall
include, with respect to the operating account of the Company, the Property
Manager. The Administrative Member shall make payments from the Company Accounts
in accordance with the Loan Documents and will fund the operating account of the
Company for use by the Manager pursuant to the Management and Leasing Agreement
from amounts available in the Company Accounts. The amounts to be funded to the
operating account from funds available in the Company Accounts for use by the
Property Manager include all amounts required to be paid in accordance with the
Annual Plans, the Property Management and Leasing Agreement and such other
agreements to which the Company is a party. The Administrative Member also will
make distributions pursuant to the terms and conditions of this Agreement. The
Administrative Member agrees that such distributions include the distribution to
the Members of all of the Company's Distributable Cash, which distributions
shall be made in accordance with the terms and conditions of Article V of this
Agreement.
(b) The Company may make such investments as are approved by UST and
Prime so long as such investments are not prohibited by any Member's
organizational documents; provided, however, that such investments shall not
preclude the timely distribution of Distributable Cash as set forth in Article
V; and provided, further, that any investment of working capital shall not
preclude the timely payment of Company obligations when and as due.
Section 6.9 Insurance. The Administrative Member shall determine the
type and levels of insurance coverage to be obtained and maintained by the
Company to protect the Company's properties and businesses against loss and
liability, which may be provided under blanket policies obtained by the
Administrative Member or Prime, and which also may cover other properties in
which the Administrative Member, Prime and/or their respective Affiliates and/or
other related parties have interests.
Section 6.10 Record Retention. The Administrative Member shall cause
all records that are required under this Agreement or under any other agreement
entered into pursuant to this Agreement to be retained by the Company for such
period of time as required by Law, but in no event for less than seven years.
Section 6.11 The Company Accountant. The Company shall retain Ernst &
Young LLP as the regular accountant, tax accountant and auditor for the Company
(the "Company Accountant"). Subject to Section 7.6(c), the fees and expenses of
the Company Accountant shall be a Company expense. The Administrative Member may
unilaterally terminate the engagement of Ernst & Young LLP as the Company
Accountant at any time after the Effective Date upon thirty (30) days' prior
written notice to Prime (which notice shall provide the specific reasons
underlying the Administrative Member's decision) and such notice to Ernst &
Young LLP as may be required by the terms and conditions of its engagement
letter or agreement. Within such thirty (30) day period, the Members shall
appoint a replacement for Ernst & Young LLP, which shall be one of the five
largest (unless the Members otherwise mutually agree) nationally recognized
accounting firms (exclusive of Ernst & Young LLP) in the United States. Such
appointment shall be effective upon the expiration of the notice period for
termination in the Ernst & Young LLP engagement letter or agreement, if any.
Thereafter, the replacement Company Accountant so appointed shall serve as the
Company Accountant until such time as the Members shall mutually agree to change
such Company Accountant.
Section 6.12 Delegation of Responsibility. The Administrative Member
shall have the right to delegate the responsibility for the performance of its
obligations under Sections 6.1, 6.2, 6.3, 6.4, 6.6, 6.7 and 6.9 to the Property
Manager pursuant to and to the extent provided in the Property Management and
Leasing Agreement.
ARTICLE VII
MANAGEMENT OF THE COMPANY
Section 7.1 Administrative Member. The Administrative Member initially
means UST and thereafter any successor manager as may be appointed by the
unanimous vote of the Members. Subject to the express limitations set forth in
this Agreement and the Property Management and Leasing Agreement, the
Administrative Member shall have (a) the full, complete and exclusive authority
and discretion to manage the operations and affairs of the Company and to make
all decisions regarding the business of the Company, (b) all the rights and
powers of a Administrative Member under the Act, and (c) all authority, rights
and powers in the management of the Company business to do any and all acts and
things necessary, proper, appropriate, advisable, incidental or convenient to
effectuate the purposes of this Agreement. Any action taken by the
Administrative Member on behalf of the Company, other than a Major Decision as
provided in Section 7.3, which shall require the written approval of both
Members (except expressly provided in Section 7.3), shall constitute the act of
and shall serve to bind the Company. In dealing with the Administrative Member
acting on behalf of the Company, no Person shall be required to inquire into the
authority of the Administrative Member to bind the Company, and such Persons
dealing with the Company shall be entitled to rely conclusively on the power and
authority of the Administrative Member.
Section 7.2 Duties of Administrative Member; Agents.
(a) The Administrative Member shall cause the affairs of the Company to
be conducted in an efficient and businesslike manner and, to the extent within
the Administrative Member's reasonable control, in compliance in all material
respects with the City Agreement. The Administrative Member shall perform its
duties as a Administrative Member in good faith, in a manner it reasonably
believes to be in or not opposed to the best interests of the Company and with
the care that an ordinary prudent person in a similar position would use under
similar circumstances. The Administrative Member may, by written instrument and
at the expense of the Company, delegate all or any of its powers, rights and
obligations hereunder and may appoint, employ, contract or otherwise deal with
any Person for the transaction of business of the Company, which Person may,
under the supervision and/or direction of the Administrative Member, perform any
acts or services for the Company as the Administrative Member may approve.
(b) Each year the Administrative Member shall cause the Property
Manager pursuant to the Property Management and Leasing Agreement to prepare an
Annual Operating Budget, Annual Leasing Plan and Annual Capital Plan ("Annual
Plans") for approval by the Members, which approval shall not be unnecessarily
conditioned or delayed. A Member shall be deemed to have approved such Annual
Plans unless such Member shall have stated its reasonably specific and detailed
objections to same within 30 days after receipt of such Annual Plans. If the
Annual Plans for any fiscal year are not approved prior to the commencement of
such fiscal year, the appropriate provisions of the prior versions of such
Annual Plans shall remain in effect with the dollar amounts increased by the
Consumer Price Index ("CPI") for the most recently completed calendar year until
the new Annual Plans are approved. The CPI shall be the CPI-U index published by
the U.S. Bureau of Labor Statistics (All Urban Consumers, All Items, All Areas,
1984-86 = 100) or any successor index. The initial Annual Plans are attached
hereto as Exhibit B.
Section 7.3 Major Decisions. The Administrative Member shall not have
the authority to take any of the following actions on behalf of the Company
without the prior written approval of all Members without regard to the relevant
size of their Membership Interests:
(i) obligate the Company as maker, guarantor, endorser, surety or
accommodation party except as provided in the Loan Documents;
(ii) except as provided in the Annual Plans, cause the Company to incur
or refinance any indebtedness;
(iii) assign, transfer, pledge, compromise or release any claims of or
debts in amounts in excess of $200,000 due the Company in the aggregate in any
fiscal year, except on payment in full;
(iv) enter into any contract or agreement between the Company and any
Affiliate of the Administrative Member which is not on terms at least as
favorable to the Company as an arms-length transaction;
(v) except as provided in Article IX, admit any Person as a Member to
the Company;
(vi) allow the Company to enter into any new lease or to modify or
terminate any existing lease;
(vii) initiate any renovation, alteration or redevelopment of the
Property or any capital expenditures in excess of $200,000 in the aggregate in
any fiscal year, except as included in the Annual Capital Plan then in effect or
to address a need of the Company in an emergency or to make tenant improvements
pursuant to an approved lease or to provide funds to pay for tenant improvements
in the amounts set forth in an approved lease;
(viii) enter into any property management or leasing agreement (except
commission agreements with an unrelated third party brokers in connection with
leasing in the ordinary course of business and the Property Management and
Leasing Agreement), or amend or modify in any material respect the Property
Management and Leasing Agreement or any other agreement which requires approval
under this clause;
(ix) list the Property or any portion thereof for sale;
(x) file for bankruptcy;
(xi) sell or otherwise transfer or convey the Property;
(xii) with respect to the Annual Operating Budget, make expenditures in
excess of any line item in the Annual Operating Budget to the extent such
increased expenditures (a) exceed the amount of the applicable line item by more
than five percent (5%) of such line item; or (b) exceed the total aggregate
amount of all line items in the Annual Operating Budget by more than one percent
(1%); and provided that Administrative Member also may authorize any expenditure
necessary to preserve life or the Property in an emergency or where prompt
action is required (provided that Administrative Member shall notify the other
Member of such expenditure as soon as practical thereafter), whether or not such
expenditures exceed the limitations set forth above;
(xiii) make or change any election under the Code, except as otherwise
provided in this Agreement;
(xiv) issue any press release on behalf of the Company or the Property
other than new leasing announcements or as may be required by applicable law; or
(xv) enter into any other joint venture, partnership or other joint
enterprise;
(xvi) terminate the Property Management and Leasing Agreement, except
as expressly permitted therein; or
(xvii) any change in the fiscal year of the Company.
Section 7.4 Non-Delegation. Each Member shall indemnify and hold
harmless the other Member and the Company against any and all claims that may be
asserted against the other Member or the Company arising out of or relating to
unauthorized actions that such Member or any Affiliate of such Member has
purported to take on behalf of the other Member or the Company, or both. Except
as expressly set forth in this Agreement or specifically approved by the
Members, neither any Member nor the Administrative Member shall have the
unilateral authority to act for or to bind the Company.
Section 7.5 Prime Assumed Obligations. Pursuant to Section 10.3 of the
Contribution Agreement, Prime agreed to pay various pre-closing obligations of
the Company, and pursuant to Section 12.4 of the Contribution Agreement, Prime
has agreed to deposit certain funds into the Existing Tenant Improvements and
Citadel Cash Flow Escrow (as defined in the Contribution Agreement) for the
purpose of securing certain obligations of the Company that Prime has assumed in
connection with the Contribution Agreement (collectively, the "Prime Assumed
Obligations"). Notwithstanding anything to the contrary in this Agreement
(including without limitation, Article VI of this Agreement, the Company shall
take all actions requested by Prime (in Prime's sole discretion and at Prime's
sole cost and expense) in connection with Prime's satisfaction of the Prime
Assumed Obligations including, without limitation: (a) releasing or directing
the escrowee to release any funds deposited pursuant to the Existing Tenant
Improvements and Citadel Cash Escrow Agreement for the purposes set forth
therein; (b) taking any actions with respect to the Bank One Rights, including
any settlement or litigation or arbitration with respect thereto; (c) taking any
actions with respect to Section 43 of the Citadel Lease (as defined in the
Contribution Agreement) including any subleases of space leased by Citadel (as
defined in the Contribution Agreement) at the building located at ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇; (d) taking any actions with respect to the
general contractor and subcontractors who constructed the Property, including
any settlements or litigation or arbitration with respect thereto; (e)
settlement of any obligations for which Prime assumed responsibility under
Section 10.3 of the Contribution Agreement; (f) taking any actions with respect
to remaining landlord obligations under the Existing Leases (as defined in the
Contribution Agreement) for payment of tenant improvement construction
allowances and brokerage commissions including any settlements or litigation or
arbitration; and (g) taking any actions with respect to enforcing the landlord's
rights under Existing Leases which accrue prior to the closing under the
Contribution Agreement and, in addition, enforcement of Bank One's obligations
under the Bank One Lease to pay its proportionate share of real estate taxes due
and payable in 2003 and/or Citadel's obligations under the Citadel Lease to pay
its proportionate share of real estate taxes due and payable in 2003.
Section 7.6 REIT Compliance.
(a) The Protected REIT is a REIT and is subject to the provisions of
Sections 856 through and including 860 of the Code. So long as the Protected
REIT owns, directly or indirectly, any Membership Interest in the Company, then,
notwithstanding any other provision of this Agreement other than Section 7.6(b):
(i) any services described on Exhibit C attached hereto that would
otherwise cause any rents from a lease to be excluded from treatment as rents
from real property pursuant to Section 856(d)(2)(c)of the Code shall be provided
by either (1) an independent contractor (as described in Section 856(d)(3) of
the Code) with respect to the Protected REIT and from whom neither the Company
nor the Protected REIT derives or receives any income or (2) a taxable REIT
subsidiary of the Protected REIT as described in Section 856(c) of the Code;
(ii) the Company shall not furnish or render services to tenants
or other persons, and shall not manage or operate the Property, other than
through the Property Manager or its replacement;
(iii) except for a taxable REIT subsidiary of the Protected REIT,
the Company shall not own, directly or indirectly or by attribution (in
accordance with attribution rules referred to in Section 856(d)(5) of the Code),
in the aggregate more than 10% of the total value of all classes of stock or
more than 10% of the total voting power (or, with respect to any such person
which is not a corporation, an interest of 10% or more in the assets or net
profits of such person) of a lessee or sublessee of all or any part of the
Property or of any other assets of the Company except in each case with the
specific written approval of Prime;
(iv) except for securities of a taxable REIT subsidiary of the
Protected REIT, the Company shall not own or acquire, directly or indirectly or
by attribution, securities representing more than 10% of the total value or the
total voting power of the outstanding securities of any issuer or own any other
asset (including a security) which would cause the Protected REIT to fail the
asset test of Section 856(c)(4)(B) of the Code;
(v) leases may contain a percentage rent clause based upon gross
receipts of the tenant, however, the leases or subleases of all or any part of
the Property shall not provide for rents based in whole or in part on the income
or profits (within the meaning of Code Section 856(d)(2)(A)) derived by any
tenant or subtenant from all or any part of the Property;
(vi) rents under a lease or sublease of all or any part of the
Property attributable to personal property leased or subleased under or in
connection with such lease or sublease shall not exceed 15% of the total rents
payable under or in connection with such lease or sublease for each taxable
year;
(vii) except as approved by Prime, permit the Company to sell,
convey, transfer or dispose of any property described in Code Section
1221(a)(1), which is not foreclosure property;
(b) Notwithstanding anything to the contrary in Section 7.6(a) hereof,
during the period that the Property Manager is affiliated with the Protected
REIT:
(i) Property Manager at the discretion of Prime, need not be an
independent contractor (as described in Section 856(d)(3) of the Code) with
respect to the Protected REIT; and
(ii) Rents from the Property attributable to the lease of space to
the Property Manager at the discretion of Prime need not be rents from real
property within the meaning of Section 856(d) of the Code with respect to the
Protected REIT.
(c) At any time during which Prime is not the Administrative Member of
the Company, Prime may, from time to time but no more frequently than quarterly,
make inquiry of counsel of its choice to determine whether any material changes
in the provisions of Section 856 through and including Section 860 of the Code
have occurred requiring changes to Section 7.6(a) and Section 7.6(b) of this
Agreement. The Administrative Member, at the request of Prime and no more
frequently than quarterly, shall forward to the Property Manager questionnaires
prepared by Prime and reasonably acceptable to the Administrative Member that
are relevant to the determination of whether any income generated by the
Property would violate the terms of Section 7.6(a) of this Agreement. The
Administrative Member shall use its commercially reasonable efforts to insure
that such questionnaires are completed and returned to Prime within thirty (30)
calendar days after such questionnaires are received by the Administrative
Member. Prime may, from time to time, notify the Administrative Member, in
reasonable detail, as to any material changes in the provisions or
interpretations of Section 856 through and including Section 860 of the Code
that have occurred requiring changes to Section 7.6(a) and Section 7.6(b) of
this Agreement and what changes Prime reasonably believes are necessary to be
made to Section 7.6(a) and Section 7.6(b) of this Agreement as a result of such
material changes. Upon receipt of notice from Prime or counsel designated by
Prime as to the changes required to be made to Section 7.6(a) and Section 7.6(b)
of this Agreement, Section 7.6(a) and Section 7.6(b) of this Agreement shall be
amended by the Members to incorporate such changes. Prime shall pay all
reasonable third party out of pocket costs and expenses incurred by the Company
in connection with actions taken by the Company to comply with this Section
7.6(c), which would not otherwise be incurred by the Company in connection with
the regular preparation of reports, accounting information, tax information or
Company audits.
ARTICLE VIII
OTHER BUSINESS
Section 8.1 Conflicts of Interest. Except as may be expressly provided
in this Agreement, nothing herein shall limit or restrict the ability of any
Member to engage in any business activity, whether or not directly or indirectly
competitive with the business of the Company, or whether or not such activity
may be an opportunity of a nature that the Company would undertake.
Section 8.2 German Interests. Prime acknowledges that UST may syndicate
in Germany ownership interests in UST, but not any Membership Interests (the
"Syndication"). UST hereby agrees to indemnify, defend and hold harmless Prime
and the Company from and against any and all claims, liabilities, damages,
expenses (including reasonable attorneys' fees) and losses which either or both
of Prime or any of its Affiliates or related parties or the Company may incur by
reason of or related to the Syndication.
ARTICLE IX
TRANSFERABILITY
Section 9.1 General. Except as otherwise provided in this Agreement, no
Member (in this context, a "Transferor") may sell, assign, exchange or pledge
(collectively "sell" or "sale"), whether directly or indirectly, all or any part
of its Membership Interest to a transferee (a "Transferee") without the prior
written consent of the other Member which may be withheld in its sole
discretion. For purposes of this Agreement, a sale or transfer shall be deemed
to occur with respect to UST if, at any time during the term of this Agreement,
(a) Estein Management Corporation is not the manager of ▇▇▇▇ and/or ▇▇▇▇ is not
the general partner of UST, or (b) a controlling interest in either of such
entities shall be sold, exchanged or otherwise transferred.
Section 9.2 Notwithstanding the foregoing, no consent shall be required
if the Transferee is an Affiliate of the Transferor. Transferor shall not be
released from its obligations in the event of such sale. Each Member hereby
acknowledges the reasonableness of the restrictions on sale of such interests
imposed by this Agreement (including this Article IX) in view of the Company's
purposes and the relationship of the members. Accordingly, the restrictions on
sale contained herein shall be specifically enforceable. In addition to and not
in limitation of the foregoing, no Member may pledge or otherwise encumber its
Membership Interest as security for repayment of a liability (except in
connection with the Loan Documents), without the prior written consent of the
other Member, which may be withheld in its sole discretion. Any such pledge or
hypothecation consented to by the other Member shall be made pursuant to a
pledge or hypothecation agreement that requires the pledgee or secured party to
be bound by all the terms and conditions of this Article IX. The restrictions on
transfer contained in this Article IX are intended to comply (and shall be
interpreted consistently) with the restrictions on transfer set forth in the
ss.18-702 of the Act.
Section 9.3 Permitted Transfers. Notwithstanding anything to the
contrary in this Article IX, Prime may, without the consent of any Member or the
Company, transfer or sell its Membership Interests in connection with any
merger, consolidation, reorganization, sale, liquidation or other similar
transaction with respect to Prime, any of its partners, Affiliates or related
parties.
Section 9.4 Transferee Not Member in Absence of Consent. Without
limiting the requirements of Section 9.1 above, a Transferor may only sell its
Membership Interest to a Transferee which is not a Member immediately prior to
the sale upon: (i) except in connection with a transfer or sale pursuant to
Section 9.3, the reasonable determination of legal counsel to the Company that
the sale is exempt from the registration requirements of the Securities Act of
1933 and applicable state securities laws and does not jeopardize any exemption
from such laws on which the Company had previously relied in selling Membership
Interests; (ii) the reasonable determination of legal counsel to the
Administrative Member that the sale will not adversely affect the status of the
Company for tax purposes or the status of the Company as a limited liability
company under applicable laws; (iii) the reasonable determination of counsel to
the Administrative Member that the sale will not cause a violation of any
applicable law or regulation binding upon it; (iv) the Transferee's written
agreement to be bound by the terms of this Agreement including, without
limitation, the Prime Purchase Option and the UST Purchase Option; and (v) the
Transferor's or the Transferee's agreement to pay all reasonable expenses of the
Company in connection with the transfer. Any attempted or purported sale in
contravention of the terms of this Agreement shall be voidable at the option of
the Company upon the vote of only the non-transferring member. No transfer of a
Member's Membership Interests shall be effective unless and until written notice
(including the name and address of the proposed transferee or donee and the date
of such transfer) has been provided to the Company and the non-transferring
Member.
ARTICLE X
DISSOLUTION AND TERMINATION
Section 10.1 Dissolution. The Company shall continue until dissolved by
any of the following events:
(a) the unanimous written consent of the Members; or
(b) any other event causing dissolution of a limited liability
company under the Act.
Section 10.2 Termination. After an event occurs that requires a winding
up as described in this Article X, the Company will continue in existence until
the winding up and liquidation of its business as described in this Article X is
completed. When the winding up is completed, the Company will terminate.
Section 10.3 Activities During Wind Up. After the date as of which
winding up is required, the Company shall not enter into any contract or
undertake any business not then subject to contract or which is not related to
the winding up of the Company. Upon winding up, a proper accounting shall be
made of the Company's assets, liabilities, and operations from the date of the
last previous accounting to the date as of which winding up is required. The
Profits and Losses realized subsequent to the date as of which winding up is
required shall be allocated in accordance with Article V and proper adjustments
made to the Capital Account of each Member. Profits and Losses realized on the
sale of any Company asset in the process of winding up shall be allocated as
provided in Article V. Assets not sold will be valued at their fair market value
and gain or loss allocated as provided in Article V as if they had been sold at
their fair market value. Except as and in the manner provided with respect to
the UST Required Additional Invested Capital, no Member shall have any
obligation to restore any deficit in such Member's Capital Account, and such
deficit shall not be considered a debt owed to the Company or to any other
person.
Section 10.4 Liquidation. As soon as the actions contemplated by
preceding sections of this Article have been completed, the cash and other
assets of the Company shall be applied or distributed in the following order of
priorities:
10.4.1 In payment of all liabilities of the Company to creditors
other than the Members. If any liability is contingent, or uncertain in amount,
a reserve equal to the maximum amount to which the Company could reasonably be
held liable will be established. Upon the satisfaction or other discharge of
such contingency, the amount of the reserve not needed, if any, will be
distributed in accordance with the balance of this Section;
10.4.2 To the Members in payment of any amounts outstanding to any
of the Members in payment of any loans made by the Members to the Company; and
10.4.3 To the Members, in accordance with Section 5.3 of this
Agreement.
ARTICLE XI
PURCHASE OPTIONS
Section 11.1 Prime Purchase Option. Prime is hereby granted the option
to purchase all of the Membership Interests of UST subject to and on the terms
and conditions set forth in this Section 11.1 (the "Prime Purchase Option").
11.1.1 Prime shall have the right to exercise the Prime Purchase
Option at any time on or between the 180th day and the 150th day (the "Prime
Option Period") prior to the maturity of the Loan made to the Company pursuant
to the terms of the Loan Documents. Prime shall exercise the Prime Option, if at
all, by providing written notice to UST at any time during the Prime Option
Period.
11.1.2 The purchase price for the UST Membership Interests shall
be equal to the greater of (a) the value of the UST Membership Interests in the
Company, determined based upon a deemed sale of the Property (and as if the
proceeds of such sale were distributed pursuant to Section 5.3) at a value
calculated using the Pro Forma Net Operating Income of the Company for the
twelve (12) month period commencing on the date that is one (1) month prior to
the maturity date of the Loan, divided by a capitalization rate of eight and
one-half percent (8.5%), less the actual amount of all unpaid tenant improvement
allowances and rental allowances for any Current Lease (with no double
counting), to the extent such amounts have not been placed in escrow by the
Company in connection with any such Current Lease, or (b) the UST Invested
Capital Threshold.
11.1.3 If Prime exercises the Prime Purchase Option, it will
deposit with Near North National Title Insurance Corporation ▇▇▇▇▇▇▇ money in
the amount of $6,000,000. The ▇▇▇▇▇▇▇ money shall be deposited within two (2)
business days after the date Prime exercises the Prime Purchase Option. The
▇▇▇▇▇▇▇ money shall be applied to the purchase price at the closing of the
acquisition by Prime of the UST Membership Interests. The ▇▇▇▇▇▇▇ money shall be
non-refundable if the acquisition by Prime of the UST Membership Interests fails
to close as a result of a default by Prime.
11.1.4 The closing of the acquisition by Prime of the UST
Membership Interests under this Section 11.1 will occur on the date that is
ninety (90) days prior to the maturity date of the Loan made to the Company
pursuant to the Loan Documents.
11.1.5 The Prime Purchase Option and the acquisition by Prime of
the UST Membership Interests also shall be subject to the applicable terms and
conditions set forth in Section 11.3 below.
Section 11.2 UST Purchase Option. If Prime does not timely exercise the
Prime Purchase Option or if Prime exercises the Prime Purchase Option, but fails
to close on the transaction contemplated thereby (except as a result of a
default by UST thereunder) then UST shall have the option to purchase all of the
Membership Interests of Prime subject to and on the terms and conditions set
forth in this Section 11.2 (the "UST Purchase Option").
11.2.1 UST shall have the right to exercise the UST Purchase
Option as follows: (a) if Prime exercises the Prime Purchase Option but fails to
close (except as a result of default by UST), then UST may exercise the UST
Purchase Option by giving written notice to Prime of such exercise on or before
the day that is seventy- five (75) days after the date on which the acquisition
by Prime of the UST Membership Interests was scheduled to close under Section
11.1 above; or (b) if Prime does not timely exercise the Prime Purchase Option,
then UST may exercise the UST Purchase Option by giving written notice to Prime
of such exercise no later than ten (10) days after the ninetieth (90th) day
prior to the maturity of the Loan made to the Company pursuant to the Loan
Documents (either of such periods, the "UST Option Period").
11.2.2 The purchase price for the Prime Membership Interests shall
be equal to the value of the Prime Membership Interests in the Company,
determined based upon a deemed sale of the Property (and as if the proceeds of
such sale were distributed pursuant to Section 5.3) at a value calculated using
the Pro Forma Net Operating Income of the Company for the twelve (12) month
period commencing on the date that is one (1) month prior to the maturity date
of the Loan, divided by a capitalization rate of eight and one-half percent
(8.5%), less the actual amount of all unpaid tenant improvement allowances and
rental allowances for any Current Lease (with no double counting), to the extent
such amounts have not been placed in escrow by the Company in connection with
any such Current Lease.
11.2.3 If UST exercises the Prime Purchase Option, UST will
deposit with Near North National Title Insurance Corporation ▇▇▇▇▇▇▇ money in
the amount of $2,000,000. The ▇▇▇▇▇▇▇ money shall be deposited within two (2)
business days after the date UST exercises the UST Purchase Option. The ▇▇▇▇▇▇▇
money shall be applied to the purchase price at the closing of the acquisition
by UST of the Prime Membership Interests. The ▇▇▇▇▇▇▇ money shall be
non-refundable if the acquisition by UST of the Prime Membership Interests fails
to close as a result of a default by UST.
11.2.4 The closing of the acquisition by UST of the Prime
Membership Interests under this Section 11.2 will occur on the date that is (a)
if Prime exercises the Prime Purchase Option but fails to close (except as a
result of a default by UST), the closing of the acquisition of the Prime
Membership interests shall be sixty (60) days after the date UST exercises the
UST Purchase Option, but in no event later than the maturity date of the Loan
made to the Company pursuant to the Loan Documents as the same may be extended
by the holder of the Loan, which extension shall in no event be for a period of
more than thirty (30) days; or (b) if Prime fails to timely exercise the Prime
Purchase Option, the closing of the acquisition of the Prime Membership
Interests shall be on or before the maturity date of the Loan made to the
Company pursuant to the Loan Documents.
11.2.5 The UST Purchase Option and the acquisition by UST of the
Prime Membership Interests also shall be subject to the applicable terms and
conditions set forth in Section 11.3 below.
Section 11.3 General Conditions. In addition to the other conditions
and requirements set forth in Sections 11.1 or 11.2 above, as applicable, the
acquisition by Prime of the UST Membership Interests or the acquisition by UST
of the Prime Membership Interests, as applicable, shall be subject to the
following general conditions and requirements:
11.3.1 Except as otherwise provided in this Section 11.3, the
Member that acquires the Membership Interests in any transaction contemplated by
this Article XI shall pay all closing costs incurred in connection with such
transaction including, without limitation, title insurance premiums, survey
costs, transfer taxes and legal fees and costs incurred by the Company, as
distinct from the Members. Each Member shall bear its own attorneys' fees and
costs incurred in any such transaction.
11.3.2 In connection with any transaction contemplated by this
Article XI, then, notwithstanding anything contained in this Agreement to the
contrary, the acquiring Member shall, as a condition to closing, cause the
transferring Member and any of its Affiliates having recourse liability (whether
arising out of guaranties, indemnities, letters of credit or otherwise) with
respect to any Loan outstanding at the time of the closing to be released
therefrom with respect to all obligations and liabilities arising after the
closing date; provided, however, that if the acquiring Member is not able to
obtain a release with respect to some or all of such recourse obligations, then
the acquiring Member and the Company shall execute and deliver to the
transferring Member an indemnity agreement in form and substance reasonably
acceptable to the transferring Member pursuant to which the acquiring Member and
the Company will, jointly and severally, indemnify, defend and hold harmless the
transferring Member from any and all losses, costs, damages, claims, liabilities
and obligations (including, without limitation, reasonable legal fees and
expenses) incurred or asserted against the transferring Member with respect to
any such recourse liabilities and obligations that are not so released.
11.3.3 The closing of any transaction contemplated by this Article
XI shall be held at the principal place of business of the Company or at such
other place as the parties may mutually agree.
11.3.4 At the closing, (a) the transferring Member shall assign to
the acquiring Member or its designee the transferring Member's Membership
Interest in accordance with the instructions of the acquiring Member and shall
execute and deliver to the acquiring Member all documents that may be reasonably
required to give effect to the disposition and acquisition of such Membership
Interests, in each case free and clear of all liens, claims and encumbrances
(other than any liens and encumbrances with respect to the then existing Loan,
if such Loan is not repaid at the time of the closing); and (b) the acquiring
Member shall pay to the transferring Member in cash the consideration for the
transferring Member's Membership Interests.
11.3.5 (a) The parties acknowledge that, pursuant to the terms and
conditions of that certain Office Lease dated January 24, 2000 (as the same has
been amended prior to the date hereof and as the same may hereafter be amended
or modified, the "Bank One Lease") between the Company (as successor in interest
to Prime/▇▇▇▇▇▇▇ Development Company, L.L.C.) and Bank one, NA ("Bank One"),
Bank One was granted certain rights and options in connection with the sale or
refinancing of the Property (the rights and options granted to Bank One in
Sections 39 and 41 of the Bank One Lease are herein referred to as the "Bank One
Rights").
(b) If any transaction contemplated by this Article XI is deemed
to have triggered the right of first offer (the "Bank One First Offer Rights")
in favor of Bank One (as contemplated by Section 39 of the Bank One Lease), then
the Company and the Members shall comply with the terms and conditions of
Sections 39 and 41 of the Bank One Lease in connection with any such
transaction.
(c) Pursuant to the terms and conditions of the Contribution
Agreement, Prime has agreed to pay all Proceeds (as defined in the Bank One
Lease) payable to Bank One in connection with any sale or refinancing of the
Building. Prime agrees that, to the extent the Proceeds are not paid to Bank One
prior to the date of this Agreement, Prime shall continue to be liable for the
payment of the Proceeds and any other liability to Bank One under Section 41 of
the Bank One Lease in accordance with the terms and conditions of the Bank One
Lease and Section 12.4 of the Contribution Agreement and the documents referred
to in Section 12.4 of the Contribution Agreement.
Section 11.4 Enforcement. The Members agree that the remedy at law for
breach of the Members obligations in Sections 11.1, 11.2 and 11.3 (other that
Section 11.3.5) is inadequate in view of (a) the complexities and uncertainties
in measuring the actual damages to be sustained by reason of the failure of a
member to comply with its obligations, and (b) the unique nature of the
Company's business and the Member's relationships. Accordingly, each of such
obligations shall be, and is hereby expressly made, enforceable by specific
enforcement.
Section 11.5 Continuation of Options. If neither Prime nor UST
exercises its Purchase Option under this Agreement during the term of the Loan
made pursuant to the Loan Documents in effect on the date hereof, then the
parties' Purchase Options shall continue in effect in connection with the Loan
obtained by the Company to refinance the Loan made pursuant to the Loan
Documents, which shall be for a term of not less than five (5) years, if
available (but not any other Loan made thereafter), with such replacement Loan
being deemed to be the Loan referred to in this Article XI.
ARTICLE XII
NO WAIVER
The failure of either Member to enforce any provision of this Agreement
or right granted hereby shall not in any way be construed to be a waiver of such
provision or right, nor in any way affect the validity of this Agreement or any
part thereof, or limit, prevent, or impair the right of either Member
subsequently to enforce such provisions or exercise such right in accordance
with its terms.
ARTICLE XIII
NO RIGHT TO PARTITION
The Members expressly waive and release any right to have the Company's
assets partitioned or sold for the period during which the Company shall remain
in existence.
ARTICLE XIV
GENERAL
Section 14.1 Entirety of Agreement. This Agreement, together with the
Contribution Agreement, the Property Management and Leasing Agreement and any
other agreements specifically referred to in this Agreement, reflects the whole
and entire agreement among the Members with respect to the subject matter herein
and supersedes all previous agreements and understandings among the Members, and
may be amended, restated, or supplemented only by the written agreement of all
Members.
Section 14.2 Notices. Unless otherwise specifically provided in this
Agreement, any written notice or other communication given pursuant to this
Agreement shall be sufficiently delivered if delivered personally (including
delivery by a nationally recognized express delivery service) or mailed by
registered or certified mail:
(a) to each of the Members at the address set forth below or at such
other address as may be designated from time to time by a Member by written
notice to the other Member and. to the Company:
If to Prime:
Prime Group Realty, L.P.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
With a copy to:
Prime Group Realty, L.P.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
With a copy to:
Jenner & Block
▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
If to UST:
Estein & Associates USA, Ltd.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
With a copy to:
▇▇▇▇▇ ▇▇▇▇▇ Ciklin ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇'▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
(b) to the Company at the principal office of the Company or such other
address as may be designated from time to time by written notice to each of the
Members.
A notice (i) sent via hand delivery shall be deemed delivered upon
receipt or refusal of delivery, (ii) sent via a nationally recognized overnight
courier shall be deemed delivered one business day after deposit with such
courier, or (iii) sent via registered or certified mail shall be deemed
delivered three business days after deposit with the United States Postal
Service.
Any Member may request that copies of notices be given to an Affiliate
of the Member at the address designated by such Member by written notice to the
other Member and to the Company; provided, however, that any failure to give
such notice shall not affect the validity of any notice given to the Member or
to the Company in accordance with this Section 14.2. Each of the Members agrees
to give such designated notice to any designated Affiliate.
Section 14.3 Further Assurances. Each Member agrees to execute and
deliver all such other and additional instruments and documents and to do such
other acts and things as may be reasonably necessary more fully to effectuate
the Company and carry on the Company business in accordance with this Agreement.
Section 14.4 Applicable Law and Choice of Forum. This Agreement shall
be governed by and interpreted in accordance with the laws of the State of
Delaware, except that any conflict of laws rule of such jurisdiction which would
require reference to the laws of some other jurisdiction shall be disregarded.
Section 14.5 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one and the same instrument.
Section 14.6 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement.
Section 14.7 Waiver. No waiver or default by either Member in the
performance of any provision, condition, or requirement herein shall be deemed
to be a waiver of, or in any manner release the other Member from, performance
of any other provision, condition, or requirement herein, nor shall such waiver
be deemed to be a waiver of, or in any manner a release of, the other Member
from future performance of the same provision, condition, or requirement. Any
delay or omission of either Member to exercise any right hereunder shall not
impair the exercise of any such right, or any similar right, accruing to it
thereafter. The failure of either member to perform its obligations hereunder
shall not release the other Member from the performance of such obligation.
Section 14.8 Public Announcements. No party to this Agreement shall
issue any press release, public disclosure or public announcement of any kind
concerning this Agreement or the leasing activities or other transactions
entered into or negotiated by or contemplated by or on behalf of the Company
during the term of this Agreement without prior consultation with and approval
of the other party, which approval shall not be unreasonably withheld.
Notwithstanding the foregoing, (a) UST or its Affiliates may conduct press
interviews, issue press releases and make public announcements regarding such
matters in Germany only; provided that neither UST nor its Affiliates discloses
any material non-public information that has not been previously publicly
disclosed by the Company in the United States, and (b) Prime and/or the
Protected REIT may make any public statement or filing which either of them
reasonably believes to be required or desirable under applicable securities laws
or in connection with any securities offering or registration by Prime and/or
the Protected REIT, or customarily disclosed by Prime or the Protected REIT in
its or their periodic public filings, or as may be requested or required by the
New York Stock Exchange or other securities market.
Section 14.9 Pronouns and Plurals. Whenever the context may require,
any pronoun used in this Agreement shall include the corresponding masculine,
feminine, or neuter forms, and the singular form of nouns, pronouns, and verbs
shall include the plural and vice versa.
Section 14.10 Force Majeure. If either Member is rendered unable,
wholly or in part, by force majeure to carry out its obligations under this
Agreement, other than the obligation to make money payments, the obligations of
such Member, so far as they are affected by such force majeure, shall be
suspended during the continuance of such force majeure. The term "force
majeure," as used herein, shall mean an act of God, strike, lockout, or other
industrial disturbance, act of public enemy, war, blockade, public riot,
lightning, fire, storm, flood, explosion, governmental restraint, unavailability
of equipment or supplies, and any other cause, whether of the kind specifically
enumerated above or otherwise, which is not reasonably within the control of
such Member. The requirement that any force majeure shall not be reasonably
within the control of such Member shall not require settlement of strikes,
lockouts, or other labor difficulty by such Member, contrary to its wishes; and
all such difficulties shall be handled entirely at the discretion of such
Member.
Section 14.11 Section Numbers. Unless otherwise indicated, references
to Section numbers are to Sections of this Agreement.
Section 14.12 Notice of Litigation. Either Member that becomes aware of
any litigation pending against the Company (other than personal injury
litigation and similar types of litigation instituted against the Company and
tendered to the Company's insurance carrier for resolution) shall give timely
notice of such to the Company and the other Member. Additionally, any Member
against which any litigation is filed in its capacity as a Member shall give the
other Member and the Company timely notice of such litigation.
Section 14.13 Severability. Any provision of this Agreement prohibited
by applicable law shall be invalid to the extent of such prohibition and severed
from this Agreement unless it is determined by the Members by unanimous vote
that such prohibition invalidates the purpose or intent of this Agreement, in
which case the Company shall be dissolved and its business and affairs wound up,
liquidated, and terminated.
Section 14.14 No Drafting Presumption. No presumption shall operate in
favor of or against any Party hereto as a result of any responsibility that any
Party may have had for drafting this Agreement.
Section 14.15 Third-Party Beneficiaries. The representations,
warranties, covenants, and obligations of the Parties hereto are made for the
express benefit of the Parties hereto, and Persons that are not express
signatories hereto are not intended to have, nor shall have, the benefit of, or
any right to seek enforcement or recovery under, any of such covenants or
obligations.
Section 14.16 Remedies. Except as otherwise expressly provided in this
Agreement, all rights and remedies under this Agreement are cumulative and in
addition to other rights or remedies under this Agreement or any applicable law.
Section 14.17 Designation of Forum and Consent to Jurisdiction. The
parties hereto (a) designate the United States District Court for the Northern
District of Illinois as the forum where all matters pertaining to this Agreement
may be adjudicated, and (b) by the foregoing designation, consent to the
exclusive jurisdiction and venue of such court for the purpose of adjudicating
all matters pertaining to this Agreement.
Section 14.18 Waiver of Jury Trial. As a specifically bargained
inducement for each other party to enter into this Agreement, each of the
parties hereto waives any right it may have to have a jury participate in
resolving any dispute arising out of or related to this Agreement, the
Contribution Agreement and the Property Management and Leasing Agreement.
Instead, any such disputes resolved in court shall be resolved in a bench trial
without a jury.
Section 14.19 Binding Agreement. This Agreement shall be binding upon
all parties hereto, their successors and assigns, and shall inure to the benefit
of the parties hereto, their successors and assigns.
Section 14.20 Exculpation.
(a) UST. This Agreement is executed by certain general partners of UST,
not individually, but solely on behalf of, and as the authorized nominee and
agent for UST, and in consideration for entering into this Agreement, Prime
hereby waives any rights to bring a cause of action against the individuals
executing this Agreement on behalf of UST (except for any cause of action based
upon lack of authority or fraud), and all persons dealing with UST must look
solely to UST's assets for the enforcement of any claim against UST, and the
obligations hereunder are not binding upon, nor shall resort be had to the
private property of any of the trustees, officers, directors, employees or
agents of UST.
(b) Prime. This Agreement is executed by certain individuals, not
individually, but solely on behalf of, and as the authorized representative for
Prime and its general partners. UST hereby waives any rights to bring a cause of
action against the individuals executing this Agreement on behalf of Prime
(except for any cause of action based upon lack of authority or fraud), and all
persons dealing with Prime must look solely to the assets of Prime and its
general partner and such general partner's general partner for the enforcement
of any claim against Prime, and the obligations hereunder are not binding upon,
nor shall resort be had to the private property of any of the trustees,
officers, directors, employees or agents of (i) Prime or (ii) the general
partner of Prime or such general partner's general partners.
Section 14.21 Performance/Holidays. Whenever under the terms of this
Agreement the time for performance falls upon a Saturday, Sunday or legal
holiday, such time for performance shall be extended to the next business day.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the Members have caused this Agreement to
be executed by their respective duly authorized officers as of the date first
above written.
PRIME:
PRIME GROUP REALTY, L.P.
By: Prime Group Realty Trust, a Maryland real
estate investment trust, its managing
partner
By: ____________________________________________
Its: ____________________________________________
UST:
UST XI DEARBORN, LTD.
By: ▇▇▇▇ Chicago, L.C., a Florida limited
liability company, its general partner
By: Estein Management Corporation, a Florida
corporation, its manager
By: ___________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇, President
Exhibit A
LOAN DOCUMENTS
[INTENTIONALLY OMITTED]
Exhibit B
ANNUAL PLANS
[INTENTIONALLY OMITTED]
Exhibit C
RESTRICTED SERVICES
o Services provided in parking garage (i.e. car wash, valet
and car maintenance)
o Concierge services
o Ticket services
o Accounting of bookkeeping for tenant
o Centralized office services
o Office suites for temporary occupancy
o Safety and security in tenant space
o Design of specialized security systems for tenant space
o Escort security
o Advertising on temporary structures
o Key replacement
o Lockout type services
o Lock changing
o Cleaning and maintenance in tenant space
o Painting in tenant space
o Light bulb replacement in tenant space
o Construction in tenant space
o Interior design or decorating
o Exercise facility (may rent space from building only)
o Instructors/Trainers in exercise facility
o Repairing personal property of tenant
o Day care of child-care services
o Tailoring communications for unique use of tenant
o Any other services that are rendered to the tenant, primarily for the
convenience of the tenant, and not customarily rendered in connection
with the lease of space for occupancy only.
EXHIBIT IV
Form of Tenant Estoppel Certificate
[INTENTIONALLY OMITTED]
EXHIBIT V
Legal Description
[INTENTIONALLY OMITTED]
EXHIBIT VI
Redevelopment Agreement
[INTENTIONALLY OMITTED]
EXHIBIT VII
Permitted Exceptions
[INTENTIONALLY OMITTED]
EXHIBIT VIII
Contracts Over $10,000 or not Terminable on 30 Days' Notice
[INTENTIONALLY OMITTED]
EXHIBIT IX
Notices of Violations
[INTENTIONALLY OMITTED]
EXHIBIT X
Brokerage Commission for Existing Leases
[INTENTIONALLY OMITTED]
EXHIBIT XI
Hook Up and/or Impact Fees
[INTENTIONALLY OMITTED]
EXHIBIT XII
Employees and Employment Matters
[INTENTIONALLY OMITTED]
EXHIBIT XIII
Tenant Defaults
[INTENTIONALLY OMITTED]
EXHIBIT XIV
Landlord's Funding Obligations Under Existing Leases
[INTENTIONALLY OMITTED]
EXHIBIT XV
Third Party Claims
[INTENTIONALLY OMITTED]
EXHIBIT XVI
Existing Articles of Organization and Operating Agreement
[INTENTIONALLY OMITTED]
EXHIBIT XVII
Pro Forma Balance Sheet
[INTENTIONALLY OMITTED]
EXHIBIT XVIII
Membership Certificate
[INTENTIONALLY OMITTED]
EXHIBIT XIX
Existing Tenant Improvements and Citadel Cash Escrow Agreement
[SEE ATTACHED]
EXHIBIT XIX
EXISTING TENANT IMPROVEMENTS AND
CITADEL CASH ESCROW AGREEMENT
ESCROW NO. __________ DATE: ________ ____, 2003
1. Capitalized terms used herein but not otherwise defined shall have the
meaning ascribed to such terms in the Contribution Agreement dated as of August
4, 2003, pursuant to which this escrow agreement is executed.
2. Prime Group Realty, L.P. ("PGRLP") is hereby depositing __________________
and No/100 Dollars ($______) with Near North Title Insurance Company ("Escrow
Agent"), which amount shall be used to fund: (a) the payment of completion costs
for the core and shell (which PGRLP and UST (defined below) acknowledge were
$6,943,702 as of August 11, 2003, subject to reduction for amounts funded after
such date) of Bank One Center, located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ (the "Project"), and (b) to fund the costs related to tenant
improvements and allowances with respect to the Existing Leases at the Project
(the "Tenant Improvement Deposit"), which PGRLP and UST acknowledge were
$18,856,996 as of August 11, 2003, subject to reduction for amounts funded after
such date. [The Tenant Improvement Deposit is subject to change based on the
remeasurement of the building.]
3. Pursuant to Section 12.4 of the Contribution Agreement, PGRLP is also hereby
depositing Fourteen Million Six Hundred Forty-Five Thousand and No/100 Dollars
($14,645,000) with Escrow Agent, which amount shall be used to fund the Landlord
Reimbursement Obligations under the Citadel Lease, and related costs and
expenses as set forth on Exhibit B attached hereto, at the Project (the "Citadel
Deposit").
4. Pursuant to Section 12.4 of the Contribution Agreement, PGRLP is also hereby
depositing __________________ and No/100 Dollars ($______) with Escrow Agent,
which amount shall be used to fund the payment of any outstanding brokerage
commissions with respect to the Existing Leases at the Project (the "Brokerage
Deposit"), which PGRLP and UST acknowledge was $35,912 as of August 11, 2003,
subject to reduction for amounts funded after such date.
5. PGRLP is also hereby depositing _________________ and No/100 Dollars
($_______) with Escrow Agent, which amount represents unpaid liabilities and
taxes and shall be used to pay same in accordance with Section 9.1T of the
Contribution Agreement (the "Unpaid Liabilities Deposit"). [This deposit will
only be required if such amount is in excess of $500,000.]
6. The Tenant Improvement Deposit, the Citadel Deposit, the Brokerage Deposit
and the Unpaid Liabilities Deposit (collectively, the "Deposit Accounts" and
individually, a "Deposit Account") shall be deposited into separate accounts,
pursuant to which PGRLP shall have the right from time to time to withdraw the
deposited funds in order to pay the above-mentioned obligations, or direct
Escrow Agent to pay the same, pursuant to the instructions below.
A. PGRLP shall submit to Escrow Agent a written request for
disbursement, with a copy of the same to UST XI Dearborn, Ltd. ("UST")
(the "Disbursement Request"). The Disbursement Request shall include
PGRLP's certification that a copy of the same has been delivered to
UST, together with reasonably detailed back-up information supporting
the request, including, in the event that funds are to be paid directly
to PGRLP, evidence that such funds represent reimbursement to PGRLP for
funds paid directly to a third party by PGRLP or an affiliate of PGRLP.
B. The Disbursement Request shall specify (i) the reasons for
the request, (ii) whether the funds should be paid to PGRLP or at
PGRLP's direction, to a third party, (iii) the Deposit Account from
which the funds are to be withdrawn, and (iv) PGRLP's certification
that the balance in such Deposit Account, after payment of the
Disbursement Request, will be sufficient to pay the remaining costs and
liabilities under the Contribution Agreement which are covered by such
Deposit Account.
C. Within five (5) business days after Escrow Agent receives
the Disbursement Request, Escrow Agent shall proceed with payment of
the requested funds, pursuant to the terms of the Disbursement Request,
unless prior to the end of such five (5) business day period Escrow
Agent has received an objection in writing to such payment from UST
("UST Objection Notice"), which such Notice shall include: (i) UST's
certification that a copy of the same has been delivered to PGRLP; (ii)
specific reasons for such objection and (iii) the amount of the
Disbursement Request to which an objection is being raised. In the
event Escrow Agent receives a UST Objection Notice, Escrow Agent shall
not pay the requested funds or applicable portion thereof described in
the UST Objection Notice, unless it receives a joint written notice
from both UST and PGRLP with contrary instructions.
7. In the event that Dearborn Center or UST provides a sworn certification to
Escrow Agent (with a written copy delivered to PGRLP), certifying that: (a)
Dearborn Center has delivered a copy of such certification to PGRLP; and (b)
PGRLP is in default under that certain Indemnity Agreement dated _________,
2003, after all applicable notice and cure periods, and that Dearborn Center has
satisfied said obligations (said certification shall also specify the nature of
the alleged default, the amount of the funds requested and the particular
Deposit Account), then within ten (10) business days after receiving said
certificate, Escrow Agent shall disburse the requested funds to Dearborn Center
unless, prior to the end of such ten (10) business day period Escrow Agent has
received an objection in writing to such payment request from PGRLP ("PGRLP
Objection Notice"), which such Notice will include: (i) PGRLP's certification
that a copy of the same has been delivered to UST, (ii) specific reasons for
such objection and (iii) the amount of UST's request to which an objection is
being raised. In the event Escrow Agent receives a PGRLP Objection Notice,
Escrow Agent shall not pay the requested funds or applicable portion thereof
described in the PGRLP Objection Notice unless it receives a joint written
notice from both UST and PGRLP with contrary instructions.
8. In the event that any funds remain in any of the Deposit Accounts after all
of PGRLP's obligations are completed with respect to the matters covered by such
Deposit Account, Escrow Agent shall disburse to PGRLP the remainder of all funds
in the particular Deposit Account within ten (10) business days after receipt of
a sworn certificate from PGRLP ("Final Disbursement Request") which certificate
shall contain PGRLP's certification that a copy of the same has been delivered
to UST, with a notice of the same sent to UST, unless prior to the end of such
ten (10) business day period Escrow Agent has received an objection in writing
to such disbursement from UST ("Final Disbursement Objection Notice"), which
Final Disbursement Objection Notice shall include: (i) UST's certification that
a copy of same has been delivered to PGRLP, (ii) specific reasons for such
objection and (iii) the amount of the Final Disbursement Request to which an
objection is being raised. If Escrow Agent receives a Final Disbursement
Objection Notice, Escrow Agent shall not disburse the requested funds or
applicable portion thereof described in the Final Disbursement Objection Notice
unless it receives a joint written direction from both UST and PGRLP with
contrary instructions.
9. Except as provided in Section 6C, 7 and 8 above, Escrow Agent is hereby
expressly authorized to disregard, in its sole discretion, any and all notices
or warnings given by any of the parties hereto, or by any other person or
corporation, but the said Escrow Agent is hereby expressly authorized to regard
and to comply with and obey any and all orders, judgments or decrees entered or
issued by any court with or without jurisdiction, and in case the said Escrow
Agent obeys or complies with any such order, judgment or decree of any court it
shall not be liable to any of the parties hereto or any other person, firm or
corporation by reason of such compliance, notwithstanding any such order,
judgment or decree being entered without jurisdiction or being subsequently
reversed, modified, annulled, set aside or vacated. In case of any suit or
proceeding regarding this escrow, to which said Escrow Agent is or may at any
time become a party, PGRLP and UST will each pay one-half to said Escrow Agent
upon demand of any and all costs, fees and expenses (including attorneys' fees,
whether such attorneys shall be regularly retained or specifically employed)
which it may incur or become liable for on account thereof.
10. Subject to the General Provisions set forth in Exhibit A attached to this
Escrow Agreement and specifically incorporated herein by reference, in no case
shall the above mentioned deposits be surrendered except pursuant to the terms
of this Agreement or in obedience of the process or order of court as aforesaid.
11. Deposits made pursuant to these instructions may be invested on behalf of
PGRLP and at PGRLP's direction, provided, that any direction to Escrow Agent for
such investment shall be expressed in writing, and also provided that Escrow
Agent is in receipt of the taxpayer's identification number and investment forms
as required. Earnings arising from the investment of funds deposited hereunder,
less the cost of making such investment, shall be paid to or for the account of
PGRLP at such time as the funds deposited hereunder are surrendered by Escrow
Agent in accordance with the terms of this Agreement. Escrow Agent will, upon
request, furnish information concerning its procedures and fee schedules for
investment.
12. Except as to deposits of funds for which Escrow Agent has received express
written direction concerning investment or other handling, the parties hereto
agree that the Escrow Agent shall be under no duty to invest or reinvest any
deposits at any time held by it hereunder; and, further, that Escrow Agent may
commingle such deposits with other deposits in the manner provided for the
administration of funds under Section 3 of Illinois Banking and Finance Act
(Chap. 17, Para. 1555 Ill. Rev. Stat.). Provided, however, nothing herein shall
diminish Escrow Agent's obligation to apply the full amount in each Deposit
Account in accordance with the terms of this Agreement.
13. In the event the Escrow Agent is requested to invest deposits hereunder,
Escrow Agent is not to be held responsible for any loss of principal or interest
which may be incurred as a result of making the investments or redeeming said
investment for the purposes of these escrow instructions, unless Escrow Agent
shall act in a negligent manner.
14. Escrow fee of $_______ is to be charged to Dearborn Center, L.L.C.
15. Each of UST and PGRLP agrees to and hereby does indemnify, defend and hold
harmless the other party from and against any and all claims (including, without
limitation, mechanics', materialmen's and similar lien claims), demands,
actions, penalties, suits, damages, losses and liabilities (including, without
limitation, the cost of defense, settlement, appeal and reasonable attorneys'
fees and costs) which such party (and/or its respective officers, directors,
shareholders, members, partners, employees, trustees, agents, assigns,
successors and affiliates) may incur or suffer as a result of any objection
notice wrongfully delivered (pursuant to Section 6C, 7 and 8 of these escrow
instructions). An objection notice will be deemed to have been wrongfully
delivered if the party that delivers such notice knew or should have known that
the other party was entitled to receive the funds requested pursuant to a
request made upon Escrow Agent.
16. All notices, requests, demands or other communications required or permitted
under this Agreement shall be in writing and delivered personally or by
facsimile transmission, or by overnight courier (such as Federal Express),
addressed as follows:
If to PGRLP: Prime Group Realty, L.P.
------------ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Fax: 312/▇▇▇-▇▇▇▇
With a copy to: Prime Group Realty Trust
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: 312/▇▇▇-▇▇▇▇
And to: Jenner & Block, LLC
One IBM Plaza
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax: 312/▇▇▇-▇▇▇▇
If to UST: UST XI Dearborn, Ltd.
--------- ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Fax: 407/▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇ ▇▇▇▇▇ Ciklin ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ & ▇'▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇
Fax: 561/▇▇▇-▇▇▇▇
If to Dearborn Center: Dearborn Center, L.L.C.
c/o UST XI Dearborn, Ltd.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: 407/▇▇▇-▇▇▇▇
If to Escrow Agent: Near North National Title
Insurance Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Fax: 312/▇▇▇-▇▇▇▇
All notices given in accordance with the terms hereof shall be deemed given and
received when delivered. Either party hereto may change the address for
receiving notices, requests, demands or other communication by notice sent in
accordance with the terms of this Paragraph.
17. This Agreement may be executed in any number of identical counterparts, any
or all of which may contain the signatures of fewer than all of the parties but
all of which shall be taken together as a single instrument.
18. In the event of any litigation arising out of this Agreement between PGRLP
and UST, the prevailing party shall be entitled to reimbursement of the costs
and expenses thereof from the other party, including reasonable attorney's fees
and including such costs, expenses and fees incurred or appeals of such
litigation.
[Signature page follows]
PRIME GROUP REALTY, L.P., a Delaware
limited partnership, its sole member
By: Prime Group Realty Trust, a Maryland real
estate investment trust, its managing partner
By: ______________________________
Name: ______________________________
Title: ______________________________
UST XI DEARBORN, LTD., a Florida limited partnership
By: ▇▇▇▇ Chicago, L.C., a Florida limited
liability company
By: Estein Management Corporation,
a Florida corporation
By: ________________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇, President
DEARBORN CENTER, L.L.C., a Delaware limited
liability company
By: UST XI DEARBORN, LTD., a Florida limited
partnership, its administrative member
By: ▇▇▇▇ Chicago, L.C., a Florida limited
liability company, its general partner
By: Estein Management Corporation, a Florida
corporation, its manager
By: ___________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇, President
Accepted and Agreed this ____ day of ___________, 2003:
Near North Title Insurance Company,
as Escrow Agent
By:___________________________
Name:_________________________
Title:________________________
EXHIBIT A TO ESCROW AGREEMENT
GENERAL PROVISIONS
1. These instructions may be supplemented, amended, or revoked in
writing only, signed by all of the parties hereto, and approved by the Escrow
Agent, upon payment of all fees, costs and expenses incidental thereto.
2. No assignment, transfer, conveyance, or hypothecation of any rights,
title, or interest in and to the subject matter of this escrow shall be binding
upon the Escrow Agent unless written notice thereof shall be served upon the
Escrow Agent and all reasonable fees, costs and expenses incident thereto have
been paid and then only upon the Escrow Agent's assent thereto in writing.
3. The Escrow Agent may receive any payment called for hereunder after
the due date thereof unless subsequent to the due date of such payment and prior
to the receipt thereof the Escrow Agent shall have been instructed in writing to
refuse any such payment.
4. The Escrow Agent shall not be personally liable for any act it may
do or omit to do hereunder as such agent, while acting in good faith and in the
exercise of reasonably prudent judgment. Escrow Agent shall be entitled to rely
upon the advice of its own attorneys in connection with any act done or omitted
by the Escrow Agent.
5. Except with respect to the UST Objection Notice, the Escrow Agent is
hereby expressly authorized to disregard any and all notices or warnings given
by any of the parties hereto, or by any other person, firm, or corporation,
excepting only orders or process of court, and is hereby expressly authorized to
comply with and obey any and all process, orders, judgments or decrees of any
court, and in case the Escrow Agent obeys or complies with any such process,
order, judgment or decrees of any court, it shall not be liable to any of the
parties hereto or to any other person, firm or corporation by reason of such
compliance, notwithstanding any such process, order, judgment or decree be
subsequently reversed, modified, annulled, set aside or vacated, or found to
have been issued or entered without jurisdiction.
6. In consideration of the acceptance of this escrow by the Escrow
Agent, the undersigned agree, jointly and severally, for themselves, their
heirs, legal representatives, successors and assigns, to pay the Escrow Agent
its reasonable charges hereunder and to indemnify and hold Escrow Agent harmless
as to any liability by it incurred to any other person, firm or corporation by
reason of its having accepted the funds deposited in the Deposit Accounts, or
carrying out any of the terms hereof, and to reimburse it for all its reasonable
expenses, including among other things, reasonable counsel fees and court costs
incurred in connection herewith. Escrow fees or charges, as distinguished from
other expenses hereunder, shall be as written above the Escrow Agent's signature
at the time of acceptance hereof.
7. The Escrow Agent shall be under no duty or obligation to ascertain
the identity, authority or rights of the parties executing or delivering or
purporting to execute or deliver these instructions or any documents or papers
or payments deposited or called for hereunder, and assumes no responsibility or
liability for the validity or sufficiency of these instructions or any documents
or papers or payments deposited or called for hereunder, other than the duty and
obligation to act in good faith and in a reasonably prudent manner.
8. In the event of any dispute between the parties hereto as to the
facts of default, the validity or meaning of these instructions or any other
fact or matter relating to the transaction between the parties, the Escrow Agent
is instructed as follows:
(a) That it shall be under no obligation to act, except under
process or order of court, or until it has been adequately indemnified to its
full satisfaction, and shall sustain no liability for its failure to act pending
such process or court order or indemnification;
(b) That it may in its sole and absolute discretion, deposit
the property described herein or so such thereof as remains in its hands with
the Clerk of the ▇▇▇▇ County, Illinois Circuit Court, in whose jurisdiction it
falls. Upon so depositing such property and filing its complaint in interpleader
it shall be relieved of all liability under the terms hereof as to the property
so deposited. The institution of any such interpleader action shall not impair
the rights of the Escrow Agent under Paragraph 6 herein.
9. The provisions of these instructions shall be binding upon the legal
representatives, heirs, successors and assigns of the parties hereto.
EXHIBIT B
The Citadel Deposit
[INTENTIONALLY OMITTED]
EXHIBIT XX
PGRLP Indemnification Agreement
[SEE ATTACHED]
EXHIBIT XX
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (this "Agreement"), dated as of
_____________, 2003, is made by PRIME GROUP REALTY, L.P., a Delaware limited
partnership ("Indemnitor"), for the benefit of UST XI DEARBORN, LTD.., a Florida
limited partnership ("UST") and DEARBORN CENTER, L.L.C., a Delaware limited
liability company ("Dearborn Center") (together, the "Indemnitee").
R E C I T A L S:
A. Indemnitor and ▇▇▇▇ Chicago, L.C. , a Florida limited
liability company ("▇▇▇▇") are parties to that certain Contribution Agreement,
dated as of August 4, 2003 (the "Contribution Agreement"), whereby PGRLP will
cause a membership interest in Dearborn Center to be issued to UST.
B. In connection with the Contribution Agreement, Indemnitor
will escrow certain funds with Near North National Title Corporation pursuant to
that certain Existing Tenant Improvements and Citadel Cash Escrow Account, in
order to secure Indemnitor's obligations under the Contribution Agreement.
C. Pursuant to the Contribution Agreement, Indemnitor has
agreed to execute this Agreement in order to provide further indemnifications
and guaranties as set forth below.
A G R E E M E N T
NOW, THEREFORE, in consideration of the premises and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Indemnitor hereby represents, warrants and covenants to
Indemnitees as follows:
1. Capitalized Terms. Capitalized terms not defined herein shall have
the meaning attributed to such term in the Contribution Agreement.
2. Indemnification. Indemnitor hereby agrees to defend, protect,
indemnify and hold harmless Indemnitee from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, claims,
costs, expenses and disbursements of any kind or nature whatsoever that may at
any time be incurred by, imposed on or asserted against Indemnitee (including
reasonable attorneys' fees and other reasonable out of pocket costs and expenses
of defense), except to the extent caused by any act or omission of Indemnitee
(collectively, the "Indemnified Matters"), based on, or arising or resulting
from (i) Indemnitor's obligations under the Contribution Agreement with respect
to the payment of all completion costs for shell and core of the Project and all
costs relating to tenant improvements and allowances with respect to Existing
Leases (as set forth on Exhibit XIV attached to the Contribution Agreement);
(ii) Indemnitor's obligations under the Contribution Agreement with respect to
the Landlord Reimbursement Obligations under the Citadel Lease; (iii) the non
payment of any brokerage commission or compensation of any kind due under the
Existing Leases, as described on Exhibit X attached to the Contribution
Agreement; [(iv) any liability and obligations of Dearborn Center under that
certain Redevelopment Agreement, dated as of August 1, 2002, as amended, which
are incurred prior to the date hereof - this will only be added if required
under Section 11.1.H of the Contribution Agreement]; (v) any claim against or
liability of Dearborn Center regarding the Bank One Rights; and (vi) any claim
that may be asserted against either party comprising Indemnitee for any alleged
obligation or liability arising from or related to events occurring prior to the
date hereof as described in Sections 8.6A and 9.1T of the Contribution
Agreement. For purposes of this Agreement, no act or omission of PGRLP shall be
attributable to Dearborn Center.
3. Reimbursement. Indemnitor agrees to reimburse Indemnitee for all
sums paid and all costs incurred by Indemnitee with respect to any Indemnified
Matter within thirty (30) days following written demand therefor.
4. No Limitation on Liability. Indemnitor acknowledges that the amounts
deposited into the Existing Tenant Improvements Escrow and Citadel Cash Escrow
Accounts shall in no way limit the extent of Indemnitor's liability under
Paragraph 2 above.
5. Miscellaneous.
(a) This Agreement and the rights and obligations of the
parties hereunder shall be construed in accordance with and be governed by the
law of the State of Illinois.
(b) All pronouns and any variations of pronouns herein shall
be deemed to refer to the masculine, feminine, or neuter, singular or plural, as
the identity of the parties may require. Whenever the terms herein are singular,
the same shall be deemed to mean the plural, and vice versa, as the identity of
the parties or the context requires.
(c) This Agreement may be executed in multiple counterparts,
each of which shall constitute a duplicate original, but all of which together
shall constitute one and the same instrument.
(d) All notices, requests, demands or other communications
required or permitted under this Agreement shall be in writing and delivered
personally or by facsimile transmission, or by overnight courier (such as
Federal Express), addressed as follows:
If to PGRLP: Prime Group Realty, L.P.
------------ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Fax: 312/▇▇▇-▇▇▇▇
With a copy to: Prime Group Realty Trust
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: 312/▇▇▇-▇▇▇▇
And to: Jenner & Block, LLC
One IBM Plaza
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax: 312/▇▇▇-▇▇▇▇
If to UST: c/o Estein and Associates, Ltd.
--------- ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Fax: 407/▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇ ▇▇▇▇▇ Ciklin ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ & ▇'▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇
Fax: 561/▇▇▇-▇▇▇▇
If to Dearborn Center: Dearborn Center, L.L.C.
--------------------- c/o Estein and Associates, Ltd.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Fax:407/▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇ ▇▇▇▇▇ Ciklin ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ & ▇'▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇
Fax: 561/▇▇▇-▇▇▇▇
(e) Neither this Agreement nor any term hereof may be changed,
waived, discharged or terminated unless such change, waiver discharge or
termination is in writing and signed by each of the parties hereto.
(f) Paragraph headings are inserted solely for ease of
reference and shall not be construed to enlarge, modify or limit the provisions
hereof.
(g) In the event of any litigation arising out of this
Agreement, the prevailing party shall be entitled to reimbursement of the cost
and expenses thereof from the other party or parties, including reasonable
attorneys' fees and including such costs, expenses and fees incurred on appeals
of such litigation.
(h) Indemnitor and Indemnitee (by acceptance hereof), having
been represented by counsel, each knowingly and voluntarily waive any right to a
trial by jury in any action or proceeding to enforce or defend any rights under
this Agreement or under any amendment, instrument, document or agreement
delivered or which may in the future be delivered in connection herewith and
agrees that any such action or proceeding will be tried before a court and not
before a jury.
(i) Indemnitor and Indemnitee hereby agree that all proceeds
or actions in any way arising out of or related to this Agreement will be
litigated in courts having sites in Chicago, Illinois. Indemnitor and Indemnitee
hereby consent and submit to the jurisdiction of any court located within
Chicago, Illinois, waive personal service of process and agree that all such
service or process may be made by registered mail directed to either Indemnitor
or Indemnitee at the address stated herein and service so made will be deemed to
completed upon actual receipt.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, this Agreement has been executed by
Indemnitor and is effective as of the day and year first above written.
INDEMNITOR:
PRIME GROUP REALTY, L.P., a Delaware limited
partnership
By: Prime Group Realty Trust, a Maryland real
estate trust, its managing general partner
By: ______________________________
Name: ______________________________
Its: ______________________________
EXHIBIT XXI
▇▇▇▇▇▇▇ Money Escrow Agreement
[INTENTIONALLY OMITTED]
EXHIBIT XXII
HELABA Loan Term Sheet
[INTENTIONALLY OMITTED]
EXHIBIT XXIII
Earnout Guarantee
[SEE ATTACHED]
EARNOUT GUARANTY
This Earnout Guaranty (this "Guaranty") is made this ____ day of
____________, 2003, by ESTEIN & ASSOCIATES USA, LTD. a Florida limited
partnership ("Guarantor") to and for the benefit of PRIME GROUP REALTY, L.P., a
Delaware limited partnership ("PGRLP") and its successors and assigns.
PREAMBLES
A. PGRLP and ▇▇▇▇ CHICAGO, L.C., a Florida limited liability company
("▇▇▇▇") have entered into that certain Contribution Agreement, dated as of
August 4, 2003 (the "Agreement"), whereby UST (as defined below) will obtain a
membership interest (the "Membership Interest") in Dearborn Center, L.L.C., a
Delaware limited liability company ("Dearborn Center").
B. Pursuant to the Agreement, in addition to other funds as
consideration for the Membership Interest, UST shall contribute funds to
Dearborn Center in the amount of $9,800,000 (the "UST Earnout") upon such time
as the Leasing Condition (as defined in the Agreement) is met.
C. PGRLP and UST XI Dearborn, Ltd., a Florida limited partnership
("UST"), an affiliate of ▇▇▇▇, will enter into that certain Amended and Restated
Operating Agreement of Dearborn Center (the "Operating Agreement"), pursuant to
which Section 4.3(b) requires the contribution of the UST Earnout as Invested
Capital (as defined in the Contribution Agreement).
D. PGRLP is requiring that Guarantor guarantees the payment of the UST
Earnout as described herein.
E. Guarantor desires to give such guaranty to PGRLP in order to induce
PGRLP to cause a Membership Interest in Dearborn Center to be issued to UST.
F. All capitalized terms used herein which are not otherwise defined
shall have the meaning ascribed to such term in the Agreement.
NOW, THEREFORE, in consideration of the promises contained herein and
for the purpose of inducing PGRLP to cause Dearborn Center to issue the the
Membership Interest to UST, Guarantor agrees as follows:
1. Guarantor unconditionally, absolutely and irrevocably guarantees the
due and punctual payment of the UST Earnout, and any interest thereon, and any
other monies due or which may become due thereon, whether according to the
Agreement or the Operating Agreement, or pursuant to any change or changes in
the terms, covenants and conditions thereof now or at any time hereafter made or
granted. The obligations referred to in this Paragraph 1 are referred to herein
as the "Guaranteed Obligations." This is an absolute, irrevocable guaranty of
payment and not of collection and PGRLP shall not be required to take any action
against ▇▇▇▇ and/or UST or resort to any other security given for the Guaranteed
Obligations as a precondition to Guarantor's obligations hereunder.
2. Guarantor hereby waives demand for payment, extension of time of
payments, notice of acceptance of this Guaranty, and indulgences and notices of
every kind with respect to the payment of the UST Earnout. Guarantor further
consents to any and all forbearances and extensions of the time of payment of
the UST Earnout, and to any and all changes in the terms, covenants and
conditions of the Agreement and Operating Agreement, as applicable, hereafter
made or granted and to the release or agreement not to ▇▇▇ without reservation
of rights of anyone liable in any way for repayment of the UST Earnout,
including, without limitation, ▇▇▇▇ and/or UST.
3. Guarantor waives any defense based upon an election of remedies by
PGRLP which destroys or otherwise impairs any subrogation rights of Guarantor or
the right of Guarantor to proceed against ▇▇▇▇ and/or UST for reimbursement.
4. Guarantor agrees that this Guaranty shall be a continuing Guaranty,
and shall not be discharged, impaired or affected by the following, whether or
not Guarantor has notice or knowledge of, or consents or agrees thereto: (i) the
existence or continuance of any obligation on the part of ▇▇▇▇ and/or UST under
or with respect to the UST Earnout except as set forth below; (ii) the power or
authority or lack of power or authority of ▇▇▇▇ and/or UST to agree to pay the
UST Earnout, or to execute, acknowledge or deliver the Agreement or the
Operating Agreement, as applicable; (iii) the validity or invalidity of the
Agreement or the Operating Agreement (unless such invalidity results in the
Membership Interest not being vested in UST); (iv) any limitation or exculpation
of liability of ▇▇▇▇ and/or UST that may be expressed in the Agreement or the
Operating Agreement, as applicable; (v) the transfer by UST of all or any part
of the Membership Interest; (vi) the existence or non-existence of ▇▇▇▇ and/or
UST as a legal entity; (vii) any right or claim whatsoever which Guarantor may
have against ▇▇▇▇ and/or UST; (viii) any defense, other than that of
performance, that Guarantor may or might have as to its undertakings,
liabilities and obligations hereunder, each and every such defense being hereby
expressly waived by Guarantor, other than defenses due to the absence of any
default by ▇▇▇▇ and/or UST under the Agreement or the Operating Agreement, as
applicable, or the absence of any Guaranteed Obligation; and (ix) the acceptance
by PGRLP of any, all or part of the UST Earnout.
5. Guarantor agrees that this Guaranty shall remain and continue in
full force and effect notwithstanding the institution by or against ▇▇▇▇ and/or
UST, or Guarantor, of bankruptcy, reorganization, readjustment, receivership or
insolvency proceedings of any nature. In the event any payment by or on behalf
of ▇▇▇▇ and/or UST to PGRLP is held to constitute a preference under the
bankruptcy laws, or if for any other reason PGRLP is required to refund such
payment or pay the amount thereof to any other party, such payment to PGRLP
shall not constitute a release of Guarantor from any liability hereunder.
6. Guarantor agrees that in the event this Guaranty is placed in the
hands of an attorney for enforcement, Guarantor will reimburse PGRLP for all
expenses incurred, including reasonable attorneys' fees.
7. Guarantor agrees that this Guaranty shall inure to the benefit of
and may be enforced by PGRLP and its successors and assigns, and shall be
binding upon and enforceable against Guarantor and its successors, assigns,
executors, administrators, and personal representatives.
8. Guarantor agrees that this Guaranty shall be governed by and
construed in accordance with the laws of the State of Illinois.
9. Guarantor agrees that in the event any one or more of the provisions
contained in this Guaranty shall for any reason be held to be invalid, illegal
or unenforceable in any respect by a court of competent jurisdiction, such
invalidity, illegality or unenforceability shall not affect any other provision
of this Guaranty, and this Guaranty shall be construed as if such invalid,
illegal or unenforceable provision had never been contained herein.
10. This Guaranty may be assigned by PGRLP only (but only to a
permitted assignee of PGRLP's membership interest in Dearborn Center), but shall
bind the heirs, administrators, executors, successors and permitted assigns of
the parties hereto and shall inure to the benefit of any successors or assigns
of PGRLP.
11. To induce PGRLP to accept this Guaranty, Guarantor irrevocably
agrees that, subject to PGRLP's sole and absolute election, all actions or
proceedings any way arising out of or related to this Guaranty will be
litigation in courts having sites in Chicago, Illinois. Guarantor hereby
consents and submits to the jurisdiction of any court located within Chicago,
Illinois, waives personal service of process and agrees that all such service or
process may be made by registered mail directed to Guarantor at the address
stated herein and service so made will be deemed to be completed upon actual
receipt.
12. Guarantor and PGRLP (by acceptance hereof), having been represented
by counsel, each knowingly and voluntarily waives any right to a trial by jury
in any action or proceeding to enforce or defend any rights under this Guaranty
or under any amendment, instrument, document or agreement delivered or which may
in the future be delivered in connection herewith and agrees that any such
action or proceeding will be tried before a court and not before a jury.
Guarantor agrees that it will not assert any claim against PGRLP on any theory
or liability for special, indirect, consequential, incidental or punitive
damages.
13. Time is of the essence of the obligations and agreements of
Guarantor set forth herein.
14. All notices, requests, demands or other communications required or
permitted under this Agreement shall be in writing and delivered personally or
by facsimile transmission, or by overnight courier (such as Federal Express),
addressed as follows:
If to PGRLP: Prime Group Realty, L.P.
------------ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Fax: 312/▇▇▇-▇▇▇▇
With a copy to: Prime Group Realty Trust
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: 312/▇▇▇-▇▇▇▇
And to: Jenner & Block, LLC
One IBM Plaza
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax: 312/▇▇▇-▇▇▇▇
If Estein & Associates USA, Ltd:
Estein & Associates USA, Ltd.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Fax: 407/▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇ ▇▇▇▇▇ Ciklin ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ & ▇'▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇
Fax: 561/▇▇▇-▇▇▇▇
[Signature Page Follows]
IN WITNESS WHEREOF, Guarantor has executed this instrument as of the
day and year first above written.
GUARANTOR:
Estein & Associates USA, Ltd., a Florida limited
partnership
By: ▇.▇. ▇▇▇▇▇▇ Corporation, its general
partner
By: ___________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇
Its: President